Some options have many strikes, others have only a few strikes. How is this regulated or who decides/defines the number of strikes an option has? Is it the underlying company itself, or the issuer (a bank?) maybe?
If your broker is happy to do this for you, you can ask them to create a strike, if you wanna trade it... So the answer is that the mkt decides...
Some years ago I traded index options with an english broker - will not name as they let me down bigtime when the shit hit the fan, but that was my own fault . At times, there were no quotes for certain put options on the ftse 100 index - I would ring my broker, ask for a quote, and he would ring me back - you were more or less expected to accept the quote from the MM, as they were usually far better than you would see quoted on the trading platform - and most of the time I took the quotes and placed the orders - same for closing positions. IB have a feature to request a quote, but I have never used it with them, so I am not sure? J_S
Update: found this info (Request-for-Quote (RFQ) orders): but it seems it's not possible with US options https://www.interactivebrokers.com/en/index.php?f=612
Btw, as far as I remember, the MM is oblidged to quote when requested, he can not refuse - but you are not obliged to accept the quote. The reason we used to take the quotes, was, we were told if you keep rejecting quotes, then they get pissed off fairly quickly, and start returning ridiculous quotes. I always wanted to spend a day with a MM, to see exactly how he operates - might do it next year sometime. J_S
But I wonder how that is to be done by a lone MM (by this I don't meaning giving a quote but rather creating a new strike). Because the new strike has first to be created somewhere centrally (OSS?), get some IDs assigned, like such: cid="725198124126448" symbol="VRX160729P00010000" and then of course get announced and distributed to the exchanges and brokers... I guess you mean getting a quote for an existing instrument. But the thread was about a not yet existing strike, ie. a new instrument. So, the question remains: how to create some additional strikes (for example after a sharp move of the underlying...)?
The exchange determines the strikes initially. Usually when a new month starts it's an ATM and say 4 stikes OTM up and 4 down.. Then when the stock moves, the exchange automatically creates new strikes, but it will usually be late. So it happens that a stock goes from 100 to 140 and suddenly no strikes beyond 125. Next day there will be new strikes to say 150. Also, market participants (not you and me, but members, market makers etc) can apply for new strikes to be added...
It depends on what kind of MM you are in what kind of class and which exchange etc. Not all market makers have to respond to all quote requests. And if they do and there's no other quote in, it tends to be the widest quote allowed. Other MM's can then choose to improve. Usually done automatically to be the first in line... And then when an interesting order comes in, something like an electronic eye/algo can lift the order...
I've seen a stock which sharply fell some weeks ago, but there are no new strikes created since then, ie. there is a lack of strikes. But the said stock has fallen very deep, has become a penny stock: GALE. But I think it still deserves some more strikes because the current situation is unsatisfactory as there are no strikes below the current spot: