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Common options terms explained. Here are some of the most common options terms and definitions. American-style option. American-style options can be exercised at any time prior to the expiration date.
Prior to 2010, [1] standard equity option naming convention in North America, as used by the Options Clearing Corporation, was as follows: For example, an Apple Inc AAPL.O call option that would have expired in December 2007 at a $122.50 strike price would be displayed as APVLZ in old convention (AAPL071222C00122500 in new convention).
Triple witching hour: the last hour of the stock market trading session (3:00-4:00 P.M., New York City local Time) on the third Friday of every March, June, September, and December, when three kinds of securities expire - stock market index futures, stock market index options, and stock options. [15]
Options Clearing Corporation's (OCC) Options Symbology Initiative (OSI) mandated an industry-wide change to a new option symbol structure, resulting in option symbols 21 characters in length. March 2010 - May 2010 was the symbol consolidation period in which all outgoing option roots will be replaced with the underlying stock symbol.
Exchanges quote options prices in terms of the per-share price, not the total price you must pay to own the contract. For example, an option may be quoted at $0.75 on the exchange.
Trading options is generally more complicated than trading stocks, so you must know a few key things before diving in. If you want to trade options, be sure to avoid these common mistakes.