Stock Charted
Glossary

Listed Option

A listed option is a standardized option contract traded on a regulated exchange, with fixed strike prices, expiration dates, and contract sizes, and cleared through a central clearinghouse.

What Is a Listed Option?

A listed option is an option contract that trades on a regulated exchange rather than being negotiated privately between two parties. The exchange sets the key terms in advance, so every listed contract for the same underlying asset with the same expiration and strike is identical. Each contract specifies the strike price, the expiration date, whether it is a call option or a put option, and the number of shares it covers. In the United States, a standard equity option typically covers 100 shares of the underlying stock.

How Listed Options Work

Standardization makes listed options interchangeable. Because every contract in a given series looks the same, an investor can close a position by trading with any other market participant. Prices form through a continuous order book, where market makers post bid and ask quotes. A central clearinghouse sits between buyers and sellers and guarantees that contracts are settled, so an investor does not need to assess the creditworthiness of the person on the other side of a trade.

Listed options also come with a public record of trading activity, including volume and open interest, which shows how many contracts remain outstanding.

Listed Versus Over-the-Counter Options

Options can also be created privately in the over-the-counter (OTC) market. These custom contracts can be tailored to unusual needs, but they are harder to compare, may be less liquid, and carry the risk that the other party fails to perform. Listed options trade openly with published prices and standardized margin requirements, which makes them easier to enter and exit. The tradeoff is limited flexibility, since an investor must choose from the strike prices and expirations the exchange offers.

Why It Matters to Investors

Listed options are the form most individual investors encounter, because their prices are transparent and their settlement is guaranteed. Reading an options quote requires understanding the series details: the underlying asset, the expiration, the strike, and the type. Listed options can also expire worthless, in which case the premium paid for the contract is lost.

Updated October 31, 2026. For general education only; not financial, tax or legal advice.

Browse the Glossary

Related Terms

Strike Price

The strike price is the fixed price at which the holder of an option can buy or sell the underlying asset, such as a stock, when the option is exercised.

Expiration Date

The expiration date is the last day on which a derivative contract, such as an option or futures contract, remains valid and can be exercised, after which it becomes void.

Call Option

A call option is a contract that gives its buyer the right, but not the obligation, to buy a specified quantity of an underlying asset at a set price before or on a set expiration date.

Put Option

A put option is a contract that gives the buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price before or on a set expiration date.

Open Interest

Open interest is the total number of outstanding derivative contracts, such as options or futures, that have been opened and not yet closed, exercised, or expired.

Option Premium

The option premium is the price a buyer pays the seller to acquire an options contract, which the seller keeps whether or not the option is exercised.