$1.00 and $2.00 strike equity options

Quote from m22au:

http://finance.yahoo.com/q/op?s=aig

Does anyone know when this started?

Is there any criteria for which stocks have strike prices below $2.50 ?

eg. FRE and FNM are trading below $1 today (and below AIG), but they only go as low as $3.00
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When they began issuing strikes that are one point apart, they established $3 as the minimum. Not sure when it started, but it's been a few years.

The 2.50 strikes are 'regular' option series that includes $5 and $7.50 strikes.


Mark
 
I am aware of $3 strike prices, my question relates specifically to the $1 and $2 strike prices.

I first noticed these today - were they in existence last week?

Also, what is the criteria for a stock to have options with strike prices below $2.50? AIG and C have them, but FRE, FNM and F do not.


Quote from dagnyt:

When they began issuing strikes that are one point apart, they established $3 as the minimum. Not sure when it started, but it's been a few years.

The 2.50 strikes are 'regular' option series that includes $5 and $7.50 strikes.


Mark
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Quote from m22au:

I am aware of $3 strike prices, my question relates specifically to the $1 and $2 strike prices.

I first noticed these today - were they in existence last week?

Also, what is the criteria for a stock to have options with strike prices below $2.50? AIG and C have them, but FRE, FNM and F do not.
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No idea but I noticed them later last week on something or another. Today I noticed them on AIG/C/GM maybe something else too. Later in the day they popped up on XLF.
 
I had also heard or thought strikes only went to 2.50 or 3.00. It honestly doesn't surprise me they would add $1 and $2 strikes however - why not take advantage when you know there will be volume?

And I just looked at AIG and there was decent volume there for those strikes. Personally, I don't see any reason for the exchanges not to offer them as long as they will be used.

JJacksET4
 
Quote from JJacksET4:

Personally, I don't see any reason for the exchanges not to offer them as long as they will be used.

JJacksET4
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At one time options were for 'real' companies only, and there were strict listing requirements.

I know the exchanges want to make money, so I assume they simply ignore the rules.

Mark
 
Quote from dagnyt:

At one time options were for 'real' companies only, and there were strict listing requirements.

I know the exchanges want to make money, so I assume they simply ignore the rules.

Mark
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Mark, I understand what you are saying. I just like to have more options (no pun intended) available.

Also, remember that AIG is still valuing out as about a $4 billion market cap company.

I don't currently have any interest in playing AIG either bullish or bearish, but if I did, better to have 1 and 2 strike options available then not to have.

One more thing - if AIG simply did a 10-1 reverse split, now they would be about a $15 stock, a $4 billion market cap still and everyone would assume they would likely have 10 and 20 strikes.

JJacksET4
 
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