Option Cycle

What is an option cycle?

An option cycle (or expiration cycle) is the pattern of months on which a class of equity options is regularly listed to expire. When an option class is first listed, it is assigned to one of a few standard cycles so that option expirations are broadly distributed across the calendar. Knowing an option’s cycle tells you which quarterly months will typically offer listed contracts beyond the two nearest (front) months.

Key points
* Most equity option classes are assigned to one of three quarterly cycles.
* At any time the two nearest months (the front months) are available for trading, plus two cycle months.
* Volume and open interest are often higher in contracts that fall on the cycle months.

How option cycles work

Options are grouped by class (all calls or all puts on the same underlying) and listed by strike price and expiration. Regulators and exchanges manage how months are made available.

At listing, an option class receives a cycle assignment. At any point in time a trader will typically see four listed expirations for that class:
1. The two front months (the current month and the next month, if applicable)
2. Two additional months determined by the class’s assigned cycle

Most options expire at 4:00 p.m. Eastern Time on the third Friday of their expiration month (standard monthly expirations).

The three standard cycles

There are three common quarterly cycles, often described by their month initials:
* JAJO — January, April, July, October
* FMAN — February, May, August, November
* MJSD — March, June, September, December

Which months are available for trading depends on the current date (the front months) plus the two remaining months from the assigned cycle. For example, a contract in the JAJO cycle will have its cycle months in the first month of each quarter (Jan/Apr/Jul/Oct); if today is February, the four listed expirations for a JAJO-class option would typically be: February, March (the two front months), plus April and July (the next two JAJO months).

What happens as time passes

The “front two months” are always maintained. As the calendar advances, the front months move forward and the two cycle months follow the originally assigned pattern. This rolling arrangement ensures continuous coverage for both short-term and longer-term expiration needs.

Special considerations

• Weekly options: The availability and importance of the traditional cycle has decreased for many liquid stocks and ETFs because weekly options provide more flexible expirations. Traders can roll or switch expirations to specific weeks throughout the year.
• Liquidity: Heavily traded securities (notably major index ETFs) may have option series available every month or many weekly expirations. These are often used for precise hedging and tend to have higher liquidity.
• Volume and open interest: Contracts that fall on the cycle months often show greater volume and open interest, which can affect spreads and execution.

Less common cycles and long-term options

• Monthly/weekly for liquid underlyings: Some highly liquid ETFs and indices have options listed every month (or offer many weekly expirations), providing more frequent expiration choices.
• LEAPS (Long Term Equity Anticipation Securities): LEAPS are long-dated options that typically expire in January of future years (at least one year from listing). They function like standard calls or puts but with much longer time horizons, making them useful for long-dated exposure or hedging.

Practical takeaway

Understanding an option’s cycle helps you anticipate which monthly expirations will be listed and when liquidity is likely to be concentrated. For most equities, expect the two nearest months plus two cycle months; for liquid ETFs and indices, expect more frequent expirations including monthly and weekly options.