Wednesday, May 21, 2008

When you look through the option chains in your brokerage application software, you might notice the individual options have ticker symbols just like stocks do. The symbol identifies the underlying stock, the expiration month, the strike price and the type of option. There are a series of letters which identify the option. They appear in the order of root, expiration month and strike price. The letter that is used for expiration month is also used to identify whether the option is a call or a put. The 1st letter or group of letters (up to 3) identify the underlying stock and is called the root (not necessary be the same as stock symbol). The next-to-last letter in an option symbol indicates the expiration month. If option is a call, the first half of the alphabet is used. If the option is a put, the second half of the alphabet is used.

The last letter of the option symbol indicates the strike price. Here are codes to decipher the strike price.

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