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Most stocks have four expiration months depending on which cycle they have been assigned to. With more and more options products being demanded, many more heavily traded securities also have weekly and LEAPS associated with them. On October 8th, 2012, I noticed that Apple Computer (AAPL) had 10 expirations listed:

· October 12, 2012 (Weekly)

· October, 20, 2012 (Cycle 1)

· November 17, 2012 (Cycle1)

· December, 22, 2012 (Special Program)

· January 19, 2013 (Cycle 1)

· February 16, 2013 (Special Program)

· April 20, 2013 (Cycle 1)

· June 22, 2013 (Exchange decision based on consumer demand)

· July 20, 2013 (Cycle 1-additional)

· January 18, 2014 (LEAPS)

· January 17, 2015 (LEAPS)

I have indicated the four months associated with a normal cycle 1 security. The three more months with a weekly and two LEAPS make sense. The June 2013 expiration is a non-traditional expiration added by the exchanges due to consumer demand. Today's article will focus in on the December 2012 and February 2013 expirations.

When studying our option trading basics, we learn that most stock options have four expiration cycles. Some securities also have long-term options (LEAPS) as well as weekly and quarterly expirations. Some of our members have noticed that there are certain actively-traded securities that have additional expiration months in addition to the ones we are already familiar with. This is a result of the Additional Expiration Months Pilot Program.

On November 1, 2010, after receiving SEC approval, the International Securities Exchange introduced additional expiration months on 20 actively-traded option classes on a pilot basis. These securities have a total of six different expiration months aside from any LEAPS series. The result will be that a selected issue will always have four consecutive near-term months as well as two more based on its expiration cycle. For example, after a November expiration, a stock on the January cycle (1st month of each quarter) would typically have expiration months available for December, January (the two near-term months); April and July (the two more from the January cycle). As a result of the Pilot Program, February and March expirations are added.

Once the December contracts expire, the October series is added as part of the January cycle (1st month in the 4th quarter) and so the available expirations would look like this (four consecutive + two more):

  • January
  • February
  • March
  • April
  • July
  • October

Below are the 20 classes selected for the pilot along with the expiration month(s) that will be added.

Symbol

Additional Months

AAPL

Feb, July

BAC

Aug

C

Feb

CSCO

Feb, July

EEM

Feb

F

Feb

GE

Feb

GLD

Feb

INTC

Feb, July

IWM

Aug

JPM

Feb

MSFT

Feb, July

PFE

Feb

QQQ

Feb

RIMM

Feb

SPY

Feb

T

Feb, July

VALE

Feb

VZ

Feb, July

XLF

Feb

Now when Blue Collar Investors view an options chain and see six expiration months or more instead of four, we know it was selected for the Additional Expiration Months Pilot Program. In October of 2011, this pilot program was retired. I spoke with Market Data Control at the ISE and was informed that even though the pilot program has been retired the ISE still generates the additional expiration months for the original list of twenty. They do not anticipate this list to expand to more securities.

Source: Covered Call Writing: Stock Options With Additional Expiration Months