April 16, 2003

Option Symbols
By John Brasher, CallWriter Publisher

Each call and put option has its own unique 3, 4 or 5-letter symbol that consists of the option base and strike code. For example, the symbol for the October $40 call for Walmart Stores Inc. is WMTJH. The WMT identifies Walmart, the J identifies it as the October call (see Expiration Month Codes table below), and the last letter H identifies it as the $40 strike price (see Strike Price Codes table below). But if the option symbol was WMTVH instead, it would indicate the $40 Walmart put option, since the V is a put symbol.

Alphabet Soup

The entire option symbol will be only 3 letters where the stock symbol itself is a single letter, such as F for Ford Motor or T for AT&T. Similarly, the option symbol will be only 4 letters where the stock symbol itself is only two letters, such as HD for Home Depot. But the entire option symbol will never be more than 5 letters.

Option Base
The option base is the 1, 2 or 3-letter code that identifies the underlying stock. For example Broadvision Inc.'s stock symbol is BVSN, but its option base is QVB, whereas both the stock symbol and option base for Walmart Stores Inc. is WMT. As noted above, some stock symbols are only one or two letters, and those will be the option base for the option symbol. Beware, however: the options on some stocks can have multiple option bases. An example is Broadvision; the November 2000 option chain showed option bases of QVB, BDV, BZV and EGQ for different Broadvision options. This is done to account for stock splits and other deviations. CallWriter always uses the most recent symbol in our Real Time Lists™.

Strike Code
The option strike code consists of 2 letters that identifies whether the option is a call or put and the expiration month, and identifies the strike price. The strike code is always the last 2 letters of the option symbol.

Expiration Month. The first letter (which is always the next-to-last letter of the option symbol) identifies the expiration month:

• Calls - A for January through L for December
• Puts -  M for January through X for December

Strike Price. The second letter of the strike code (always the last letter of the option symbol) always indicates the strike price. Some common sense is needed in regard to strike price. For example, the V code always indicates a strike at the $12.50 level, but it could be $12.50 in the case of ORCL, $112.50 in the case of IBM, $212.50, $312.50, etc.

Examples
A TDF option symbol indicates the AT&T APRIL $30 call option. HDSH indicates the Home Depot JULY $40 put option. IBMES indicates the IBM MAY $95 call option. Here's why:

Code Tables
The following tables graphically illustrate the Expiration Month Codes (next-to-last letter) and the Strike Price Codes. Feel free to print this article out for handy reference.

Expiration Month Codes

Strike Price Codes

Confirm that Symbol!
When running an option trade, always do the following triple check:

1)  Check the option symbol against a current option chain, because
     it is very easy to transpose letters or otherwise screw up the symbol.

2)  Before submitting the trade, confirm that all option elements - the
     underlying stock, type of option (put or call), the expiration month,
     strike price and option premium - match the option symbol.

3)   When you get the trade confirm, always check it against the trade
      you intended to run. If there's a mistake, catch it fast!

Otherwise, you could buy or sell the wrong option, and it can happen easier than you might suppose if you don't confirm the option symbol. Keep in mind that splits, reverse splits and other recapitalizations sometimes occur, which complicate option symbols. We've seen oddball symbols that involved buying or selling options on two separate stocks, where a merger was occurring. On a spread or other multi-option trade, the wrong option symbol could hurt, and expose you to losses. The trading software might catch the mistake and might not. Don't expect your broker to eat any trade charges or losses if you entered the wrong symbol, unless you can show conclusive proof the fault is the broker's. If the order is given to a live options broker, he should double check the symbol and confirm all the option elements with you before running the trade.

Good luck and good trading!