When it comes to options, sometimes it pays to “roll” with the punches.

In options trading, “rolling” means replacing an existing options position with a new one that has the same strike price, but an earlier or later expiration date. Or, you can stay with the expiration month but roll up or down to a different strike price to accommodate the underlying stock’s movement.

But after deciding to roll a position, new traders are sometimes surprised to find that stocks don’t always have options available for all coming months. But what may be particularly puzzling was that, if they were following certain stocks/options for the past year, they would know that there were options that expired in each month of the last calendar year.

So, how can there have been options available in each month that has passed but not in each month that hasn’t happened yet?

For example, perhaps you want to roll your existing Research In Motion (RIMM) September 100 Calls into the RIMM February 100 Calls.

But on the particular day that you want to make this trade, you find that, while you can purchase options for December and January, there are no …

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… February options available for RIMM. (Or, depending on when you’re trying to make the trade, October and November may not be readily available either.)

Why is that?

Like most everything else, options have an expiration cycle. And just like any other cycle, it changes as it goes and expands as needed.

The expiration cycle is simply a sequence of dates on which the options of a particular security expire. All options (other than LEAPS, which are long-term options) are placed in one of three cycles: the January cycle (January, April, July, October), the February cycle (February, May, August, November), or the March cycle (March, June, September, December).

In the case of RIMM, you know that if there are September and December options available, that it falls into the March cycle.

Keep in mind that, as we are “cycling” through the year, that as months fall off of the old cycle, new months are added.

You may be wondering, though, why you can’t just trade any option you want at any time you want. Hence why you can “roll” a position — you may want to jump into a particular trade now, and you can always “roll out” to a later expiration month when it becomes available.

Believe it or not, there really is a method behind the madness!

When the options exchanges first opened, each stock was randomly assigned to one of three cycles — there is absolutely no rhyme or reason to the assignments.

As options trading increased, floor traders, as well as some individual investors, preferred to trade for shorter terms, so the Chicago Board Options Exchange decided that all stocks would always have the current month plus the following month available to trade.

Further, every stock has at least four expiration months trading at any given time. Under those new rules, …

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… the first two months are always the nearest two months.

Let’s look at how this works using the January cycle as an example. There is always the current month plus the following month available, so there will be January and February options for all optionable securities. But because there must be options available for at least four months, the next two months from the original cycle would be April and July. Thus, the stock will have options available in January, February, April and July.

What happens when the January options expire? Because the February options are already trading, February simply becomes the spot-month (or, next-month) contract. Since the next two months of options must be available after an expiration Friday, March will begin to trade on the first trading day after the January expiration date, which makes February, March, April and July the four months available at that time.

But then, it gets a little tricky.

Once the February options expire, March becomes the current contract. The following month, April, is already trading. But with March, April and July contracts trading, there are only three expiration months available. To create the fourth, …

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… they return to the original cycle and add October because it is the next month in the January cycle after July. This results in the March, April, July and October options being available to trade. The same system determines which months are trading for stocks on the February and March cycles.

Knowing how options expiration cycles work is especially important for traders who use options spreads and other trading techniques involving multiple options positions with the same underlying stock, but all options investors can benefit by understanding what options will become available to them in the future to help build the next move.