40 lines
2.0 KiB
Plaintext
40 lines
2.0 KiB
Plaintext
26
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Option
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XYZ December 10 call
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XYZ December 110 call
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Part I: Basic Properties ol Stock Options
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Symbol
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XYZLB
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XYALB (wrap symbol is XYA)
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Note that the wrap symbol now allows the usage of Bin its standard interpretati<,n
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once again.
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This process can be extended. Suppose that, by some miracle, this stock rose to
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205 prior to the December expiration. Things like this happened to Yahoo (YHOO),
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Amazon (AMZN), Qualcomm (QCOM), and others during the 1990s. If that hap
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pened, the exchange would now create another wrap symbol and use it to designate
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strike prices from 205 to 300. Suppose XYZ traded up to 210, and the exchange then
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said that YYA would now be the wrap symbol for the higher strikes. In that case, these
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symbols would exist:
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Option
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XYZ December 10 call
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XYZ December 110 call
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XYZ December 210 call
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Symbol
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XYZLB
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XYALB (wrap symbol is XYA)
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YYALB (wrap symbol is YYA)
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Note that there doesn't have to be any particular relationship between the wrap sym
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bols and the stock itself; any three-character designation could be used.
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LEAPS SYMBOLS
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A LEAPS option is one that is very long-term, expiring one or more years hence.
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Consequently, the expiration month codes encounter a problem with LEAPS similar
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to the one seen for striking price codes where wraps are concerned. The letter A
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stands for January as an expiration month code. However, if there is a LEAPS option
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on this same stock, and that LEAPS option expires in January of the next year, the
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letter A cannot be used to designate the expiration month of the LEAPS option, since
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it is already being used for the "standard" option. Consequently, LEAPS options have
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a different base option symbol than the "standard" base option symbol.
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Example: The current year is 2001. The OCC might have designated that, for IBM,
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LEAPS options expiring in the year 2002 will have the option base symbol VBM, and
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those expiring in the year 2003 will have the option base symbol WBM. Thus, the fol
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lowing symbols would be used to describe the designated options: |