TransWikia.com

Call option strike prices don't exceed stock price?

Personal Finance & Money Asked on March 7, 2021

I noticed that some options have strike prices that don’t exceed the current market price of the underlying stock. Why would this be? For example, GameStop doesn’t have any strike prices above $60 for February 12. I would think, even if no one was selling calls, that the volume and open interest would simply be 0 but there would still exist such contracts.

If I go to March 5, the open interest is blank. What does this imply?

2 Answers

Until Jan 12th (less than 2 weeks ago), the stock was $20. It has skyrocketed over this time. Within a few weeks, if it stays at or near this level, you'll see new strikes opened.

Part of the issue is that 2 weeks ago, the chance of a March 5th price exceeding $60 was so low that the $60 was probably trading for a cent. Why add the $65 strike so far out of the money? Now, you'll see it added.

Answered by JTP - Apologise to Monica on March 7, 2021

When options first begin trading in an underlying, in-, at- and out-of-the-money strikes are listed. As the underlying moves toward the outer strikes, they'll gradually add additional strikes on that side. If the underlying quickly gaps outside the existing range of strike prices (as GME did), they'll add new strikes on the next trading day.

Open interest is calculated after the close of the trading day. So if contracts begin trading today, there will be no open interest because there was no previous trading. Plan B is that it's bad data. Check to see if OI shows up on Monday.

Answered by Bob Baerker on March 7, 2021

Add your own answers!

Ask a Question

Get help from others!

© 2024 TransWikia.com. All rights reserved. Sites we Love: PCI Database, UKBizDB, Menu Kuliner, Sharing RPP