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Stock Option Symbol Changes
The new option symbol changes took place on Friday, February 12th. All options became 8 to 21 symbols long.
The goal is to make options easier to decipher but all you really need to know to place a trade is the underlying stock, the expiration month you want, the strike price and whether it’s a call or a put. They will look more complex but most brokerage accounts have already upgraded their trading platforms so that you really don’t even need to remember the option symbols anyway.
The one problem with current option quotes is that some stocks use their stock symbols as the first part of the option while others don’t. For instance, the option quotes for International Business Machines (IBM, $123.52, up $0.52) start with “IBM” while the options for Microsoft (MSFT, $28.02, up $0.18) start with “MSQ”.
We will look at these two stocks and their current options and show you the new change.
The IBM February 125 Calls (IBMBE, $1.16, up $0.04) currently look like this. The new option symbol becomes (IBM100220C00125000). NOTE: The “option root symbol” can be up to 6 characters long.
The Microsoft February 27 Puts (MSQNB, $0.24, down $0.10) will become (MSQ100220P00027000). NOTE: Until February 12th the option root will be the same as the previous. After the 12th, they should read (MSFT100220P00027000).
The stock’s underlying ticker symbol will always be used in the new symbol. MSQ will soon become MSFT. The days of “decoding” option root symbols are coming to a close. This wasn’t a big deal anyway but it does make things easier.
The second element, the expiration date, is always six numbers. In this case, “100220″ for both IBM and Microsoft represents February 20, 2010, the expiration date for February 2010 options. The first two numbers, “10″, represents 2010; the “02” for February; and “20” for the day. A 2011 option reads “11”, a December option would be “12”
The expiration date is always on the Saturday that follows the third Friday of the month, unless that Friday is a market holiday, in which case the expiration is on the Friday. This is a little confusing though as the last day to trade options for February is Friday, the 19th.
The third part is if the option is a call or put which is represented with a “C” or “P”.
The last set of numbers represents the strike price, which consists of eight numbers. The first 5 denote the strike dollar price, and the remaining 3 represent the decimal (if any).
Thus, “00027000″ represents the Microsoft February 27 put strike. If it were a 27.50 strike, it would read “00027500.”
The new terminology will take some getting used to but again, as long as you know the stock, the month you are playing, the strike price and if it’s a call or put option you will be fine. If you have any questions, email us.
