Sunday Knowledge: Be Ready for the Option Symbols to Change

It has been announced that the option symbols will change soon. From what I understand the exact date is February 12, 2010. First, I believe this change will eventually lead to a more liquid market as the symbols will be easier to understand for the average investor. Why they didn't make this change a long time ago, I'll never understand, but it is soon to take effect. I figured I owed it to my many readers on OptionMaestro.com, so hope it helps!


Highlights:

• More detail in new symbol will be a bit longer but more descriptive
  
• The new option symbol will always include the companies common stock Ticker symbol
• The new option symbol will include the expiration date
• The new option symbol will include the strike price
• The new option symbol will include the type of option (call or put)

Example:

For example let's assume we want to purchase November $200 strike call options on Apple (AAPL). The current ticker may look like APVKT (under old symbology K is code for November call, and T is code for the 200 strike (also code for 100, 300, and 400 strikes). When the symbol change takes place the new option symbol will look like:

AAPLNOV212009200CALL

Breakdown of new symbol is fairly easy once familiar with it.
AAPL---NOV212009---200---CALL
Ticker---Expiration---Strike---Type

I have not heard too much about this change, and it will certainly be confusing for those who aren't expecting this change. Being that option volumes have surged over the past 5 years (see chart here), I figured this change would have been talked about a bit more than it has been. Hope this gives you some kind of heads up before the day it changes.


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