By Investopedia Staff Updated Oct 25, The option ticker explains four main things about the option: the underlying stock, whether it is a call or a put option, the expiration month and the strike price.
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An option ticker is quoted by a series of letters. This is a lot of information crammed into one ticker, but we can help you decode option ticker symbols.
Option Ticker Structure An option ticker can be broken down into three parts. The first part of the option ticker is the options symbol, which can vary in letter length.
Typically, this symbol will be found on all the options of the company and will be identical to the stock symbol. However, foreign sites with signals for binary options is not absolute.
- The price of the call contract must act as a proxy response for the valuation of 1 the estimated time value — thought of as the likelihood of the call finishing in-the-money and 2 the intrinsic value of the option, defined as the difference between the strike price and the market value multiplied by max[S-X, 0].
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The second part of the option ticker is the expiration date and the call or put classification of the option, and it consists of a single letter. There are 12 possible expiration periods for options - one per month. Options classified from A to L are call options and M to X are put options.
Options Spreads What Is an Option? Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset.
The third part of the option ticker is the strike price of the option, and this is also a single letter. Because there is a wide range of potential strike prices and a limited number of letters, each letter represents more than one strike price. This creates the need for a bit of guesswork, but nothing overly complex.
During his two-decade career in Asia and the US, Nathan has consulted in strategy, valuations, corporate finance and financial planning. Options, which come in the form of calls and puts, grant a right, but not an obligation to a buyer. Within the context of financial options, these are typically to purchase an underlying asset. Plain vanilla options can be worth something or nothing at expiry; they cannot be worth a negative value to a buyer since there are no net cash outflows after purchase. A seller of plain vanilla options is on the opposite side of the trade and can only lose as much as the buyer gains.
Here is a visual breakdown of an Oct. This leaves the other two letters as the options symbol GM.
Again, the second part of the ticker I explains the month of expiry and whether it is a call or a put. Looking at the above chart, we see that this is a call option that expires in September.
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By looking at the option ticker, we now know that it is a Sept. Strike Price When it comes to the strike price, it is important to remember that strike prices for most options do not vary a great deal from the current stock price.
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Stock Restructurings Be warned that in the event option price is named stock options exchanges, like five for seven stock splits or mergersthere may be no way to use the codes above to find out information about the option.
If such a restructuring occurs, the exchange on which the option is traded will change the option ticker symbol accordingly. Compare Accounts.