Options traders might be about to draw a line under 25 years of confusion with the imminent completion of the Symbology switch-over on Friday February 12.
But there is unlikely to be much nostalgia for the soon to be obsolete Opra coding system which caused chaos and hampered development of the options industry.
Under the old system on trading screens, options contracts are limited to a maximum of five alpha characters. The first one to three of these identify the option and the remaining two indicate the expiration month, call/put indicator and strike price.
For example, MSQER would represent a call triggered at $90 on a Microsoft option which expires in May 2006.
There were no numbers in the Opra system, but Symbology can include letters and numbers.
Such illogical indicators will be consigned to history when the February 12 deadline makes it compulsory to use the new option identification system which allows up to 21 characters for each contract.
OCC vice president of member services Dave Harrison, speaking to FOW from Chicago, was upbeat about the switch-over: Options brokerages are in varying stages of completion.
Some firms like Reuters have been Symbology-compliant for over a year now, others are slower in coming on board.
Harrison said that there have been no significant problems so far and feedback from traders has been positive: The real dividend will come after the conversion during the consolidation phase when market participants will reap the benefits of the new user-friendly system.
This sentiment was generally echoed by options brokerages. Peter Bottini, executive vice president of trading and customer services at Options Express, said: So far, so good. We will be keeping an eye on the smaller options exchanges to ensure that the information appearing on the screens is accurate and timely and there may be the odd glitch here and there, but were pretty positive about the changes.
The new system is much more intuitive than Opra, which is a relic leftover from prehistoric options market history.
The change has certainly been a long time coming. The Symbology Committee was formed in July 2005 to resolve the Opra problem. It went through several stages of consultation and testing. The final stage will be after the conversion on Friday with the completion of the consolidation phase on May 4.
The new system will also include long-term equity anticipation securities (LEAPS) and exchange listed flexible contracts (FLEX) which were never standardized under the Opra methodology.
Mike West mwest@fow.com