An option cycle is a set of months that are used to determine when quarterly options expire. Most options series will be assigned one of three option cycles when the stock is initially listed. Options that expire on the assigned cycle dates generally have higher volume and more open interest than those with expiration dates on non-cycle months.

Option cycles are an essential part of the options market as they provide liquidity and help keep the options market orderly and efficient. Often, options that expire on the assigned cycle dates receive more attention from market participants such as traders, brokers, and investors alike. Similarly, options that expire on the assigned cycle date tend to have higher open interest, which results from more traders actively trading the option contract.

By organizing the financial products into different option cycles, traders can more easily anticipate prices on the days leading up to the expiration date. This helps create a more orderly flow for the market, which helps to reduce the amount of risk traders face.

Option cycles can also affect the overall performance of a company's stock. Common periods of heavy option trading usually precede large stock price movements, and traders will pay closer attention to the assigned cycle dates in order to capitalize on these fluctuations in price.

Another benefit of option cycles is that they can help traders minimize the risk associated with options trading. Having a predetermined set of expiration dates allows traders to more easily identify cyclical patterns and take advantage of them. By planning trades around these predetermined expiration dates, traders can reduce their exposure to large, unexpected changes in volatility.

Option cycles are an important part of the options market and help to ensure that the market remains orderly and efficient. By providing more information about what prices to expect in the future, option cycles give traders the ability to plan ahead and maximize their reward from trading.