Understanding Stock Options Abbreviations, Part 2

First is the symbol for the stock (in this case, three letters). This is followed by a period and then a two-letter code indicating month and striking price. Distinction between call and put is part of the month code. A Wal-Mart September call with a striking price of 60 is designated as WMTIL A put for the same striking price and month is designated as: WMT.UL.

For LEAPS the abbreviations are more difficult. Just as computer programmers in the 1950s and 1960s did not anticipate the problems of the millennium when they assigned only two digits for years, the designers of option trading symbols did not foresee the problems of multiyear LEAPS options. While the abbreviations for traditional listed options are straightforward, abbreviations for LEAPS options would need to take into consideration both the multiple-year problem and the possibility of multiple-level outstanding options.

The exchanges have run out of symbols. With nearly 500 stocks trading LEAPS, the problem is made worse by the fact that some listings exceed the 100-point spread and may have existing LEAPS outstanding for 105 and 205 striking prices, for example. Under today’s system, there is no easy way to define the rule for symbols, because it continues to evolve.

Fortunately, you do not need the symbol in order to find a LEAPS listing. You can simply go to one of many web sites offering free listings and look up the contract. The Chicago Board Options Exchange (CBOE) offers one of the best services of this type. As options trading becomes increasingly efficient online, it is also likely that the use of abbreviated options symbols for terms will become obsolete. The need for such abbreviations came from the days when most trades took place by phone. So a trader did not need to tell the broker to buy a “Wal-Mart September 60 call.” He could simply instruct the broker to buy a WMTIL. If trading takes place online, the whole process will be more automatic than in the past, and the use of symbolsespecially given the complexity of LEAPS tradingmay fade.