Who create the option's strike prices?

Discussion in 'Options' started by medisoft, Sep 21, 2010.

  1. medisoft


    Hi! I didn't found in the Internet who (institution or person or whatever) create the different strike prices on a stock.

    Why some have lot of strike prices, and others only a couple of them.

    Do you know some information source to read about this?
  2. heech


    Specified by the exchange.
  3. medisoft


    Ah, I see, so if a stock is on Nasdaq, is the Nasdaq who create the options...

    Is there some rules for that?

    Why some stocks in very low prices (less than 2$) have options and others not?
  4. MTE


    Options exchanges determine on which stocks to list options and what strike intervals to set.
  5. The exchanges.
    They create rules:

    i.e. for stocks under $50 strikes are spaced $1 for the front and back months. for next months they are spaced $5
    For stocks over $50 strikes, they are spaced $5 for front and back months, $10 for next months, etc.

    They publish the rules.