I have installed Views Slideshow module 7.x.3.1. Also, inside the sites/all/libraries I downloaded the cycle2 plugin. I placed jquery.cycle2.min.js into the jquery.cycle2 folder, so it is at sites/all/libraries/jquery.cycle2/jquery.cycle2.min.js.
When I tried creating a view using Format : slideshow, I encountered the following error:
CYCLE OPTIONS You need to install the jQuery cycle plugin. Create a directory in sites/all/libraries called jquery.cycle, and then copy jquery.cycle.all.min.js or jquery.cycle.all.js into it. You can find the plugin at http://malsup.com/jquery/cycle.
Even after installing the cycle plugin in the libraries folder, I could not see an option for cycle2.