The Myth of 80% of Options Expiring Worthless

[wayneL]

Just came across the fair dinkum statistics.

The oft asserted statistic that > 80% of options expiring worthless is a total phallacy.

From the CBOE:

Most people believe that 90% of options
expire worthless. However, this is untrue.
Normally, only about 30% of options
expire worthless in each monthly cycle.
Only about 10% of options are exercised
during each monthly cycle, usually in the
final week before expiration.
In fact, over 60% of all options are traded
out in the marketplace. This means that
buyers sell their options in the market, and
writers buy their positions back to close.

Vindicated at last

 

[RichKid]

Just came across the fair dinkum statistics.

The oft asserted statistic that > 80% of options expiring worthless is a total phallacy.

From the CBOE:

Most people believe that 90% of options
expire worthless. However, this is untrue.
Normally, only about 30% of options
expire worthless in each monthly cycle.
Only about 10% of options are exercised
during each monthly cycle, usually in the
final week before expiration.
In fact, over 60% of all options are traded
out in the marketplace. This means that
buyers sell their options in the market, and
writers buy their positions back to close.

Vindicated at last

Thanks Wayne, Mr Mythbuster.....then another way to put it for the CBOE is that 90% of options are not exercised. Wonder what it's like for the local markets?