FMAN

  

Categories: Derivatives

There are three regular option cycles: FMAN, JAJO, and MJSD. FMAN stands for February, May, August, and November, which is the pattern for when option contracts on one cycle expire.

If you need a refresher, options are securities that are bets on other securities. For instance, you can place a bet that a certain ETF, index, or other asset will hit a certain price (a “strike price”) by investing in an option. That’s why expiration dates for options are so important: they determine who wins and who loses in the options game.

Unlike long-term investors, options investors are always on their toes. Before an option expires, the options holder can “exercise” the option (which means buying or selling the stock at the strike price, for call and put options respectively) or not, whichever they choose. FMAN is the time when options holders have to choose what to do, like a real MAN.

Related or Semi-related Video

Finance: What Is a Call Option?25 Views

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finance a la shmoop. what is a call option? option? option, where are you? okay

00:09

yeah yeah. not phone options, call options. and a close but no cigar. a call option [man smokes in a tub of cash]

00:14

is the right to call or buy a security. the concept is easy the math is hard.

00:24

you think Coca Cola's poised for a breakout as they go into the new low

00:30

calorie beverage business. their stock is at 50 bucks a share and you can buy a [man stands on a stage as crowd cheers]

00:35

call option for $1. well that call option buys you the right

00:39

to then buy coke stock at 55 bucks a share anytime you want in the next

00:44

hundred and 20 days. so let's say Coke announces its new sugarless drink flavor

00:48

zero it's two weeks later and the stock skyrockets to fifty eight dollars a

00:53

share. you've already paid the dollar for the option now you have to exercise it. [man lifts weights]

00:59

so you buy the stock and you're all in now for fifty five dollars plus one or

01:04

fifty six bucks a share and your total value is now fifty eight bucks. well you

01:10

could turn around today and sell the bundle that moment, and you'll have

01:13

turned your dollar into two dollars of profit really fast. and obviously had the [equation on screen]

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stock not skyrocketed so quickly well you would have lost everything. still you

01:23

lucked out and now you're sitting on some serious cash, courtesy of your call [two men in a tub of cash]

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options. as for Coke flavor zero turned out to be nothing more than canned water.

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