Standardized strike prices and expiration dates in the option market

Question

Quizplus · Accepted Answer

Standardized strike prices and expiration dates in the option market allow for more efficient trading strategies by providing a level playing field for all market participants. This also allows hedgers, speculators, and arbitragers to all operate together, leading to a more liquid and efficient market. By standardizing these aspects, it also makes it easier to compare prices and option contracts, facilitating transparent pricing and reducing the potential for market manipulation.  Additionally, this doesn't necessarily lower time premiums but can lead to more accurate pricing of options, leading to more efficient pricing throughout the market.

Standardized Strike Prices and Expiration Dates in the Option Market