Exchange traded fund options are standardized put and call options on underlying exchange traded funds (ETFs). ETFs are securities representing ownership in portfolios of stocks or bonds designed with an objective to generally correspond to the price and yield performance of individual indexes.
In the U.S., options on ETFs are offered on all six options exchanges. The specifications follow :
- The minimum trade size is one option contract. Each contract represents 100 shares of the underlying ETF. (Corporate actions, such as rights offerings,stock dividends, and mergers, can result in adjusted contracts representing something other than 100 shares of stock.)
- Two consecutive near term expiration months plus two successive months from the January, February or March cycle. (LEAPS may also be available)
- The Saturday following the third Friday of the expiration month.
Last Trading Day
- The last business day prior to expiration (normally a Friday).
- American style. Options may be exercised on any business day prior to expiration.
Delivery Method if Exercised
- Exercise notices properly tendered on any business day will result in the delivery of the underlying ETF on the third business day following exercise.
Exercise Price Intervals
- Exercise (strike) prices are set at $1.00 intervals bracketing the current value of the underlying ETF.
Option Premium Quotations
- Stated in dollars and cents. Minimum price variant $0.05 (nickel) for series trading under $3.00 and $0.10 (dime) for series trading $3.00 and above.
Settlement of Exercise
- Three business days following exercise.
Minimum Customer Margin for Uncovered Writers
- 100% of the market value of the option plus 20% of the value of the underlying security less any out-of-the-money amount, subject to a minimum of 100% of the market value of the option plus 10% of the value of the underlying security. Margin and commission may vary between brokerage firms. There are risks associated with margin trading.
- For options on Select Sector SPDR Funds: 9:30 a.m. to 4:00 p.m., New York time. For options on other ETFs: 9:30 a.m. to 4:15 p.m., New York time.
Listing of ETF options across exchanges
Some of the more active and popular ETF options are offered on all of the options exchanges, while others are exclusive to one or a few exchanges. The Options Clearing Corporation provides a listing for each ETF option -- symbol, expiration, strike, ticker for calls and puts, open interest and position limits, and exchanges offering the option -- in a convenient spot online [].
- Options Industry Council Web site: http://www.optionseducation.org/
- Options Clearing Corporation, listing of ETF options 
- "Product Specifications: Exchange Traded Funds". Options Industry Council.