The name of an option consists of 4 parts, which are its four pieces of data:
- Underlying asset
- Type of option
- Exercise price
- date of expiry
The name of the option is shown below and is read from left to right:
|June 30,2008 $100K Call House|
|June 30,2008 $100K Put House|
Uniformity of data
The data relating to options on the same “underlying asset” are usually uniform. For example, in the case of houses, the price of the houses is always in thousands of dollars and the expiry is always on the last day of the month.
The uniformity of data enables us to abbreviate the name of the option. The abbreviation is based on the fact that the person trading in options will recognize the meaning of the abbreviations.
the abbreviated name of the call option will be:
|June $100K C H|
Explanation of abbreviations
H – House.
C – Call.
100 – $100K.
June – June 30, 2008.
The abbreviated name of a Put option will be:
|June 100 P H|
A further abbreviation of the name: If we know for certain that the underlying asset is a house, we can dispense with the H.
For example: When the options appear in the newspaper under the title “Prices of options on houses”. The abbreviated name will be: