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Monday, March 19, 2007

Back To Basic

I remembered one of the questions I ask myself when I first started options trading was: What makes a stock optionable? For those who are new to options trading or even those who have been trading for sometime but don't have the answer to this question, here's 4 criteria companies must meet to have their stocks traded on options exchanges:

1) The stock must be listed on the NYSE, AMEX or Nasdaq.

2) The closing price must have a minimum per share price for a majority of trading days during the three prior calendar months.

3) The company must have >= 7M publicly held shares.

4) The company must have >= 2,000 shareholders.

Also, because of the second condition listed above, a company that has just launched its IPO needs to wait at least 3 months for its options to be traded (if it also meets all the above criteria)

Source: Investopedia


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