Option naming convention

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In financial markets, an option naming convention is a method of identifying which of many possible options is being quoted or traded.

Video Option naming convention

Standard convention

In North America the usual naming convention is as follows:

An option code looks like this: SLW150515C19 This is a call option on SLW

Stock option names are written in the following format: SYMBOL+MONTH+STRIKE

• SYMBOL = Option Root Symbol, normally the stock's ticker symbol
• MONTH = Month the option expires
• STRIKE = Strike price

Expiration Month Codes

Strike Price Codes

Maps Option naming convention

Proposed revision

For US options, a new initiative, led by the Options Clearing Corporation, has been tasked with developing a new symbology for exchange traded options. The proposed revision is meant to address several deficiencies with the standard convention described above. In particular:

• Lack of uniformity for LEAP option convention (i.e. options with maturity greater than one year)
• Use of illogical identifiers for both options and underliers
• Difficulties encountered when rolling LEAP options to standard options as they age.
• Ambiguous naming, such as when options for both 105 strike and 205 strike exist on the same expiration for an underlier.

The new symbology will do away with the letter codes for strike and expiration, and instead employ a 21-byte series key with the following fields:

• Symbol (MSFT, max. 6 characters)
• Yr (06)
• Mo (03)
• Day (18)
• C/P (C)
• Explicit Strike (00047)
• Decimal (500)

All options that settle into the same underlier (e.g. 100 shares of the underlier) will share the same symbol field.

Rollout of the new symbology convention is planned for 2009.

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References

Source of the article : Wikipedia