Dawn Pennington

Options Tickers Can Stay the Same

by Dawn Pennington   08/19/08

When you're looking to trade stocks, chances are that you look at their charts and study their historical trading patterns before you decide to channel your money into the names that have caught your attention. There are a number of free online services where you can call up a chart and check out its activity anywhere from the past day to the past few years.

However, if you've tried to look up charts and/or prices for options that have expired, you'll find that this data isn't available after the contracts are no longer available to trade. Why is that? Because assuming the underlying stock continues trading in a similar range going forward, most of the options that went out on the third Friday of their expiration month will come back to life at a later date.

In an options ticker, the last two letters in a ticker represent the strike price and the expiration month.

MAKE A FIRST-CLASS TRADE IN COACH

For example, when the Coach (COH) February 27.50 Calls (COHBY) expire, they will come off the board for a while as the data is cleared from the options exchanges. But this may not be the last time you see that ticker.

In fact, if shares of Coach would continue trading in the neighborhood of that $27.50 strike price, that option will come back to life because there will be a need to have call options at the $27.50 exercise price available with a February expiration date.

So, after the calls are "off the board" for a while, they will come back, but it will be understood that they will expire in less than a year. There's no need to change the ticker because every letter in a ticker represents something.

With the ticker COHBY, the root symbol "COH" is the underlying stock's ticker. The fourth letter in the five-letter option ticker, "B," represents February expiration. And finally, the Y in this particular case represents the $27.50 exercise price.

WILL APPLE ALWAYS STAY FRESH?

Keep in mind that option prices and their available tickers are set based on how a stock is trading at any given time, which means that if a stock is trading in the $10 range this year and it goes on to trade in the $60 area in a couple of years, the way its options traded in the past will have little influence over how they trade in the future.

By that, I mean, it wasn't that long ago when shares of Apple (AAPL) were barely moving at $7, yet even as the stock flirted with $200 a share, investors still couldn't get enough of them.

In fact, investors are so interested in buying Apple options that there is a very broad range of strike prices available. With Apple trading at $200, options with strike prices have been made available from as low as $20 to as high as $280 for both calls and puts.

So while it would be helpful to know how Apple's options traded when the stock was at $80, you can look at how the stock itself traded and determine from there whether you think it will have a similar performance or whether you should play it another way.

And in the case of Coach, if the shares move up through the high-$30 range and into the $40s, chances are that those calls at the $27.50 strike might become too expensive to trade (depending on your investment style) and you might find yourself looking for options with higher strike prices to play, as those would typically cost a bit less to buy than those in-the-money $27.50 calls.

As stock prices change, more options at various strike prices become available to trade. The years might shift, but their option tickers look like they are seemingly here to stay!

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For more information about option ticker symbols, check out Dawn Pennington's "Why Options LEAP to New Ticker Symbols."