"How To Refer To Options?"
"How do you express an option? Ex. -Slv120121c40 for the Jan 21 slv call? "- Asked By John Stewart on 2 Nov 2011
Answered by Mr. OppiE
Hi John,
All options contracts comes with its unique options symbol, which is the Slv120121c40 in your question. However, unlike in stock trading where you refer to the stock you wish to trade by its symbol (MSFT for Microsoft for instance), options symbols are extremely complex with strings of numbers which can be easily misquoted through the phone back in the days before online brokers. As such, options traders developed the convention of telling the brokers the specific stock, month, strike and type directly instead of the options symbol itself, which is the "Jan 21 slv call" in your question.
However, in today's world of online brokerages, almost all options trades executed by retail options traders are performed online. If you look into your online broker interface, you will almost definitely see options quoted in the stock, month, strike and type convention as well rather than the symbols. As such, it is almost a fixed convention across the options trading world to quote options that way. In fact, if you would to express an option by its symbol to a professional options trader today, don't be surprised that options trader don't know which contract you are talking about. Basically, nobody quite pay a lot of attention to the specific options symbols anymore.
In conclusion, if you are using a call in broker to place your options trades, you would definitely have to refer to the option in the stock, month, strike, type convention in order not to misquote the specific contract that you wish to trade. If you are using an online broker, you are almost certain to already be using the stock, month, strike, type convention already.
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