Tuesday, March 11, 2014

What Is The Meaning Of Stock Market Option Letters

Options are derivatives of an underlying stock or other security that are useful tools to manage or transfer risk to a counter-party. Like stocks, options have symbols to identify their related stock, as well as a controlling price and an expiration date.


Security Identifier


The root symbol for an option, whether it's a call or put, is the same as the ticker symbol of the underlying shares. For example, options and stocks on Intel Corporation use the ticker symbol INTC.


Expiration Date


Options expire on the third Friday of each month, typically at least every three months. The next piece of information in the option symbol is the expiration date, which is listed in a year/month/day format. For example, a 120121 represents an expiration date of Jan. 21, 2012.


Call or Put


The third piece of information denotes the call option type. C identifies the option as a call and P denotes it is a put option.


Strike Price


The final piece of identification is the strike price, the price at which the underlying stock is controlled. This price is represented with a series of numerals. There is no decimal point, so a strike of 00022500 indicates the option strike price is $22.50, 00065000 represents a $65 strike price and so on.