Open Rotation

The options market functions very differently than the stock market. For one, the options market is waiting on the stock market, and other markets, since options are dependent on underlying securities. The way options markets function is via an open rotation system. (You rent options; you own stocks, more or less.)

The open rotation starts with pinning prices of underlying securities for the options to be traded, as orders and quotes start rolling into the options market. The options that expire the soonest are first, followed by options that expire later. This process happens with call options, then put options, “rotating” the options, and putting them on the exchange, where they’re traded. One full rotation is when an entire group of options is priced, put on the exchange, and traded (or dies on the vine).

Since options must go through this orderly process, the open rotation is what keeps the ball rolling. Sometimes, the open rotation may be paused, like if the underlying security is also paused, and restarted. Different options have their own open rotation speeds, depending on the trading volume, liquidity, and other factors.