What rules govern when a new option series is issued?
The CBOE Rule Book, Section 5.5 explains exactly what programmes are available, how and when they will start listing and expire. The super-concise summary is: It's a per-underlying decision process, though there's some rules that may provide you with a minimum set of options (e.g. the quarterly programme on highly capitalised stocks trading for more than $75, etc.) For greater detail, for better or worse, you will have to scan the New Listings service regularly. "Without researching the securities in question I couldn't tell you which cycle each is in, but your answer is that they have different expiration cycles. The following definition is from the CBOE website; ""Expiration cycle An expiration cycle relates to the dates on which options on a particular underlying security expire. A given option, other than LEAPS®, will be assigned to one of three cycles, the January cycle, the February cycle or the March cycle."""
In Australia there are 2 type of warrants (I don't know if it is the same in the US, UK and other countries), the first are trading warrants and the second are instalment warrants. The trading warrants are exactly what it says, they are used for trading. They are similar to option and have calls and puts. As Cameron says, they differ from exchange traded options in that they are issued by the financial companies whereas options are generally written by other investors. Instalment warrants on the other hand are usually bought and sold by investors with a longer term view. There are no calls and puts and you can just go long with them. They are also issued by financial companies, and how they work is best explained through an example: if I was to buy a stock directly say I would be paying $50 per share, however an instalment warrant in the underlying stock may be offered for $27 per warrant. I could buy the warrant directly from the company when it is issued or on the secondary market just like shares. I would pay the $27 per warrant upfront, and then in 2 years time when the warrant expires I have the choice to purchase the underlying stock for the strike price of say $28, roll over to a new issue of warrants, sell it back on the secondary market, or let it expire, in which case I would receive any intrinsic value left in the warrant. You would have noticed that the warrant purchase price plus the strike price adds up to more than the share price ($55 compared to $50). This is the interest component inherent in the warrant which covers the borrowing costs until expiry, when you pay the second portion (the strike price) and receive the underlying shares. Another difference between Instalment warrants and trading warrants (and options) is that with instalment warrants you still get the full dividends just like the shares, but at a higher yield than the shares. I've already worked for a major broker dealer. I came to ask this question on Reddit for unbiased advice. I've asked multiple people the same question in industry and they always tell me something different. Since I will be registering in my home state of New York, I looked up what the regulations are and was even further confused. One website says  &gt;Licensing Requirements: Series 65, Series 66 and Series 7 combined, or one of the following acceptable professional designations: CFA, CFP, CIC, ChFC, PFS.  Whereas another says  &gt; If you have taken the Series 65 or both the Series 66 and Series 7 within the last two years, you do not have to do anything.  My confusion is the part where the first website says Series 65, Series 66, and Series 7 combined. "First off, I originally brought up Wells Fargo to show that big banks may not want to open the floodgates for lower level employees and management to have free reign to profit off customers in less than responsible ways. I didn't mean or want to get into a debate about past govt. oversight of Wells Fargo's practices. [But to your point:](https://www.housingwire.com/articles/39782-cordray-answers-charges-that-cfpb-didnt-take-lead-on-wells-fargo-scandal)  &gt;He explained that the bureau first received a whistleblower tip in July 2013. The exposé by the LA Times wasn’t published until December. &gt; &gt;Cordray did add that the LA Times coverage was a “splendid piece of investigative reporting” and that investigative reporting often aides government investigations. &gt; &gt;After that first whistleblower tip, Cordray explained that the Wells Fargo case over time grew into something bigger. &gt; &gt;As the CFPB watched Wells Fargo through 2014 and 2015 in supervisory activity, it became clear the situation was serious enough to migrate into an enforcement action, he said.  I'm not sure what you're talking about here:  &gt;And what are you talking about freedom to ""compete"" against the big guys? What are you even talking about and how is that freedom threatened?  I'm saying they *will* have freedom to compete in ways that may have negative impact on clients who have chosen to move their investments from bigger banks to smaller ones.  As for the list of ""positives"" you gave surrounding this bill, [there are also negatives:](http://fortune.com/2017/06/07/financial-choice-act/)  &gt;Congress this week is considering the Choice Act, which would roll back regulations enacted after the 2007 financial crisis, particularly those designed by the Consumer Financial Protection Bureau (CFPB). Yet, the legislation goes even further and limits consumer access to information that could help them make better choices. &gt; &gt;One of the hallmarks of conservative regulatory philosophy is that educated and empowered consumers are preferable to government bureaucrats, regulations, and prohibitions. Yet, the conservatives in the House of Representatives appears ready to pass the CHOICE Act this week and in the process legally prohibit publishing data the government collects on consumer complaints on financial services. This is a mistake and would cost consumers and businesses. It would also go against the universal values of fair markets and informed consumers.  But [this](https://www.nytimes.com/2017/06/08/business/dealbook/house-financial-regulations-dodd-frank.html) is what I find most concerning:  &gt;The bill would also eliminate the Labor Department’s fiduciary rule, which requires brokers to act in the best interest of their clients when providing investment advice about retirement. The first parts of the rule are scheduled to go into effect on Friday. The rule was completed last spring under Mr. Obama after years of development.  My point, before you started arguing something different, was that larger banks often *need* the oversight conducted by their customers and the government in order to help them nip bad practices in the bud before it becomes a much larger issue. This may not be as much of an issue for smaller banks, but in the end, they all deal in the same industry and present the same danger to their customers if things go bad and employees don't take their intrinsic fiduciary responsibility seriously." The joint narrative here is that a Democracy is a poor form of government.  That’s why it is great that we don’t have a Democracy.  We have a republic.  And our Republic is showing fracturing.  What causes fracturing?  It isn’t just difference of opinion, as Madison states.  It is also a refusal to listen to, work with, or acknowledge the legitimacy of the arguments of our opposition or dissenting members.  We fail to communicate properly, holding attitude and superiority above understanding and attention.  You won’t fix a communication issue with a change of government.  Our communication issue has festered into distrust.  How can you trust someone who won’t even acknowledge your point of view?  How can you trust someone who is willing to dust you to save their own skin?  I doubt any government can survive poor communication.  Our government waste can be seen as poor communication as well.  People with one interest refuse to acknowledge their opposition, and put into place inflexible and unsustainable rules.  Those rules address the one issue those people saw, but fail to account for market forces, new social views, geography, or sometimes simple greed.  People love that the first issue is handled, and are willing to watch the ship sink rather than change.  Opposition refuses to acknowledge the reason the rules were originally created. Both sides get defensive, and division increases.  Let’s always look to the source of the issue, that we may cure as close to the root as possible, rather than be content fighting the symptoms. A Section 1256 contract is any: Non-equity options include debt options, commodity futures options, currency options, and broad-based stock index options. A broad-based stock index is based upon the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). 60% of the capital gain or loss from Section 1256 Contracts is deemed to be long-term capital gain or loss and 40% is deemed to be short-term capital gain or loss. What this means is a more favorable tax treatment of 60% of your gains. http://www.tradelogsoftware.com/tax-topics/futures/ It's a really wierd rule (arbitraty 60% designation, so broad, etc), but section 1256 contracts get preferential tax treatment and that's what Buffett's talking about. On the US markets, most index options are European style.  Most stock and ETF options are, as you noted, American style. "I think the question, as worded, has some incorrect assumptions built into it, but let me try to hit the key answers that I think might help: Your broker can't really do anything here.   Your broker doesn't own the calls you sold, and can't elect to exercise someone else's calls. Your broker can take action to liquidate positions when you are in margin calls, but the scenario you describe wouldn't generate them:  If you are long stock, and short calls, the calls are covered, and have no margin requirement.  The stock is the only collateral you need, and you can have the position on in a cash (non-margin) account.   So, assuming you haven't bought other things on margin that have gone south and are generating calls, your broker has no right to do anything to you. If you're wondering about the ""other guy"", meaning the person who is long the calls that you are short, they are the one who can impact you, by exercising their right to buy the stock from you.  In that scenario, you make $21, your maximum possible return (since you bought the stock at $100, collected $1 premium, and sold it for $120.  But they usually won't do that before expiration, and they pretty definitely won't here.  The reason they usually won't is that most options trade above their intrinsic value (the amount that they're in the money).    In your example, the options aren't in the money at all.   The stock is trading at 120, and the option gives the owner the right to buy at 120.* Put another way, exercising the option lets the owner buy the stock for the exact same price anyone with no options can in the market.  So, if the call has any value whatsoever, exercising it is irrational; the owner would be better off selling the call and buying the stock in the market." "Following comments to your question here, you posted a separate question about why SPY, SPX, and the options contract don't move perfectly together.  That's here Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other? I provided an answer to that question and will build on it to answer what I think you're asking on this question.  Specifically, I explained what it means that these are ""all based on the S&P.""  Each is a different entity, and different market forces keep them aligned.  I think talking about ""technicals"" on options contracts is going to be too confusing since they are really a very different beast based on forward pricing models, so, for this question, I'll focus on only SPY and SPX. As in my other answer, it's only through specific market forces (the creation / redemption mechanism that I described in my other answer), that they track at all.  There's nothing automatic about this and it has nothing to do with some issuer of SPY actually holding stock in the companies that comprise the SPX index. (That's not to say that the company does or doesn't hold, just that this doesn't drive the prices.)  What ever technical signals you're tracking, will reflect all of the market forces at play.  For SPX (the index), that means some aggregate behavior of the component companies, computed in a ""mathematically pure"" way.  For SPY (the ETF), that means (a) the behavior of SPX and (b) the behavior of the ETF as it trades on the market, and (c) the action of the authorized participants.  These are simply different things. Which one is ""right""?  That depends on what you want to do.  In theory you might be able to do some analysis of technical signals on SPY and SPX and, for example, use that to make money on the way that they fail to track each other.  If you figure out how to do that, though, don't post it here.  Send it to me directly. :)"