Chapter 1: Definitions 
Option Description 
IBM January 125 call (expiring in 2001) 
IBM January 125 call (expiring in 2002) 
IBM January 125 call (expiring in 2003) 
IBM January 125 put (expiring in 2003) 
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Option Symbol 
IBMAE 
VBMAE 
WBMAE 
WBMME 
Note that the last line shows a LEAPS put option symbol. The letter M stands for a 
January put option - the standard usage for the expiration month code. 
STOCK SPLITS 
Stock splits often wreak havoc on option symbols, as the exchanges are forced to use 
the standard characters in nonstandard ways in order to accommodate all the addi­
tional strikes that are created when a stock splits. The actual discussion of stock splits 
and the resultant option symbology is deferred to the next section. 
SYMBOLOGY SUMMARY 
The exchanges do a good job of making symbol information available. Each exchange 
has a Web site where memos detailing the changes required by LEAPS, wraps, and 
splits are available for viewing. 
The OCC and the exchanges have been forced to create multiple option base 
symbols for a single stock in order to accommodate the various strike price and expi­
ration month situations - to avoid duplication of the standardized character used for 
the strike or expiration month. This is unwieldy and confusing for option traders and 
for data vendors as well. In some rare cases, mistakes are made, and there can briefly 
be two designations for the same option symbol. The only way to eliminate this con­
fusion would be to use a longer, more descriptive option symbol that included the 
expiration year and the striking price as numerical values, much as is done with 
futures options. It is the member firms themselves and some of the quote vendors 
who object to the transformation to this less confusing system, because they would 
have to recode their software and alter their databases. 
DETAILS OF OPTION TRADING 
The facts that the strategist should be concerned with are included in this section. 
They are not presented in any particular order of importance, and this list is not nec­
essarily complete. Many more details are given in the discussion of specific strategies 
throughout this text.