An organized securities exchange, the primary purpose of which is to provide a location and framework for trading standardized option contracts. An option exchange handles its trading much as a stock exchange handles its trading in stocks and bonds. Until 1973, with the opening of the Chicago Board Options Exchange, all options were traded through a limited number of firms specializing in them. Most of the options traded at that time were so unique that it was difficult or impossible to close a position in one before its expiration.
