I'm pleased that email questions are finding their way back to me. I encourage your questions. It's about inquiring minds and all that. And, since I'm a bit of a confrontational person, I like to deal with questions as they turn up.

I work the same way in the seminars I teach. I answer questions right away. Don't you just hate when some "teacher" says to "just write your questions down and we'll get to them later"? I've been to dozens of seminars and had dozens of questions ignored and/or procrastinated by salesmen masquerading as "teachers." It always left a real bad taste in my mouth. It's not easy for us ask a question - whether it be verbal, at a seminar, or even via email. Why? Because we take a chance of looking stupid. That's why, when someone asks a question, I respect them. If they want to learn, I'm going to be there for them. If I want a student to respect me, I'll answer his questions.

Mike -- Did I miss it in one of your columns? I would like to ask you if you can tell me how long a stock option lasts? That is, when does a stock option really start? We all know they end on Expiration day, but when do they start? Whether traded or not, exactly WHEN.......does a stock option begin? Is there specific, set time for a stock option to start? - Dave F.

Hi Dave - Good question. First you need to know that all stocks are assigned an option "cycle." There are three separate "cycles" - the January, February and March cycles.

1. The "January Cycle", will always have options in three month increments - January, April, July, and October.
2. The "February Cycle" will always have options in three month increments - February, May, August, and November.
3. The "March Cycle" will always have options in three month increments - March, June, September, and December.

For example, Yahoo (YHOO) stock has a January cycle. Look at the option chain below.

From an earlier column, you will (or should) recall that options will always be available to trade in the current month AND in the following month. At this writing, September (2006) is the current month and October (06) is the following month. The current and following month options of any optionable equity are always available to be traded. Then, after the following month option (October 06), the next available month will be that of the assigned cycle (January 07).

Note the red arrows. You will see that YHOO has October (06), January (07), and April (07) options available to be traded. But, what happened to July (07)?

Never fear, July's options will be available in October. An option will typically be opened by the market makers for trading nine months prior to its expiration.

LEAPS

There is another factor that comes into play - LEAPS. Many, but not all, stocks have these long term options. LEAPS will expire in January of the designated year. Look at the orange arrows on the option chain. You will see that the expiration of the LEAPS options are January 08 and January 09. No other options will be opened during 2008 - at least for now. Why? Because it is not nine months before the expiration of the options that would be opened. For instance, the April 08 option would open after the July 07 options expire.

Equities that have LEAPS will always have LEAPS options available to be traded in January- whether they happen to be in the cycle or not.

While we're on the subject of LEAPS, note the blue arrows in our YHOO option chain. Those are the strike prices on the near term options - in $2.50 strike price increments. Normally, the $2.50 strike price increments stop at the $25 strike price. However, there are exceptions to the rule. With very liquid stocks, market makers can open up other strike prices ($27.50, $32.50, $37.50) if they feel there will be sufficient demand. Check out the blue arrows.

The LEAPS are often opened "without" some of the strike prices. Check out the green arrows in January 08 and January 09. Notice that the $2.50 strike price increments are missing. They will become available as time passes and the market makers believe the demand for these options makes it worthwhile.

To Make A Long Story Longer

So, Dave, to answer your question . . .

1. The options within a stock's cycle have a life of nine months.
2. The options not in a stock's cycle have a life of two months.
3. LEAPS have a life of as much as 2 ½ years.

Mike Parnos is an options instructor and mentor.  Online Trading Academy trading knowledge...your most valuable form of capital.