Charles Schwab

Summary of the change

• What is happening to options symbols?

  The Options Clearing Corporation (OCC), an industry-wide body that oversees the clearance and settlement of exchange-listed options traded on all 7 options exchanges in the U.S., has instituted a change in the way options symbols are represented in data transmissions between financial services firms.

  Options symbols have increased in length from 5 characters to 21 characters as part of a new industry standard format used in back-end operations, and now contain both numbers and letters.

  Brokerage firms and data providers are allowed to create their own translation of the new industry standard format in their presentation of options symbols to the public.

• Why are options symbols changing?

  The OCC has decided to undertake this change in response to changes in technology and the proliferation of new options products by the exchanges. The number and types of options products have grown substantially in recent years, straining the capacity of the original symbol format. The new, longer symbol format accommodates new products and supports future growth.

• What does the new industry standard symbol format look like?

  The original options symbols contained up to 5 characters and consisted of 3 data elements. This format is known in the industry as the OPRA (Options Price Reporting Authority) code.

  Symbol AAQED
  There are 3 data elements:
  1	2	3
  Root symbol	Expiration date and call/put indicator	Strike price
  AAQ	E	D
  Meaning: A call on Apple that expires in May with a $20 strike price.

  In the example shown, AAQ is the root symbol that signifies the underlying security. E denotes both the expiration date and whether the symbol is for a call or a put. D conveys what the strike price is. This example displays an option call on Apple, Inc. that expires in May with a $20 strike price.

  The new industry standard symbol format (which is also be known as the “OCC series key”) has 21 characters and consists of 4 data elements.

  Old: AAQED
  becomes
  New: AAPL 100522C00020000
  The new symbol format has 4 data elements:
  1	2			3	4
  Underlying security (root symbol)	Expiration year	Expiration month	Expiration day	Call/Put indicator	Strike price (dollars)	Strike price (decimals)
  AAPL	10	05	22	C	00020	000
  Meaning: A call on Apple that expires May 22, 2010, with a $20 strike price.

  Please note:

  • The stock’s underlying ticker symbol, which is the first data element, will always be used in the new symbol. In our example, “AAQ” becomes “AAPL,” the actual stock ticker symbol for Apple.
  • The data element for the underlying security has room for up to 6 characters. Spaces are officially considered part of this element, and are counted as part of the 21 characters. This means that a 4-character ticker like AAPL will be followed by 2 spaces; a 3-character ticker like IBM will be followed by 3 spaces, and so on. If a ticker took up all 6 character slots, then there would be no space between it and the next data element, which is the date.
  • The second data element is the expiration date. In this case “100522” is 2010, 05, 22 or May 22, 2010.
  • The third data element is the call/put indicator, denoted by a “C” or “P.”
  • The fourth data element is the strike price; 5 character spaces are assigned for the strike dollar price, with 3 spaces for any decimals. “00020000” means a strike price of $20.00.

Schwab’s approach

• Schwab created its own symbol format? Why?

  Schwab sought the input of clients just like you through extensive research to create a symbol format that we believe is intuitive and easy to use. You may see other firms also create their own unique symbol formats for the display of options symbols.

• What does Schwab’s symbol format look like?

  Schwab’s symbol format is a variation of the industry standard format, and also consists of 4 data elements. Schwab symbols looks like this:

  Schwab’s symbol: AAPL 05/22/2010 20.00 C
  Schwab’s symbol format has 4 data elements:
  1	2			3		4
  Underlying security (root symbol)	Expiration month	Expiration day	Expiration year	Strike price (dollars)	Strike price (decimals)	Call/Put indicator
  AAPL	05	22	10	20	.00	C
  Meaning: A call on Apple that expires May 22, 2010, with a $20 strike price.

  Please note:

  • The date field uses a format that is more common and easier to read.
  • Unused spaces in the strike price and the underlying security are invisible. Extra zeroes have been eliminated.
  • The call or put symbol appears at the end for easy identification of the option type.
  • Single spaces have been inserted between each of the 4 data elements to improve readability.

  For comparison purposes, here are the two symbols placed side by side, both representing the same option contract:

  Industry standard symbol: AAPL  100522C00020000

  Schwab’s symbol: AAPL 05/22/2010 20.00 C

• If Schwab uses its own symbol, how is data exchanged with other firms?

  You will see Schwab’s symbol displayed on Schwab’s website and trading platforms. However, when Schwab systems are communicating with other firms to exchange options information, the industry standard symbol is used.

• Do symbol formats other than Schwab’s work if they are entered into one of Schwab’s sites?

  The industry standard symbols work on Schwab’s sites if they are entered precisely: the correct stock symbol, followed by the correct number of spaces, followed by the rest of the characters with no spaces.

  5-character symbols are followed by 1 space
  4-character symbols are followed by 2 spaces
  3-character symbols are followed by 3 spaces
  2-character symbols are followed by 4 spaces
  1-character symbols are followed by 5 spaces

  For example:

  Correct: ORCL  100320C00030000 (Note there are 2 spaces between the “L” and the “1.”)

  Incorrect: ORCL   100320 C000 30000 (Note there 3 three spaces between the “L” and the “1,” plus spaces among the rest of the characters.)

  If you currently use financial news sites to retrieve options quotes to copy and paste, you can still do so. However, you should be aware that there are known issues with the copy and paste functions of HTML text, which may at times cause a symbol to be incorrectly pasted into Schwab’s option symbol field. You should ensure that the symbol is pasted precisely as detailed above; otherwise you may get an error message.

  Like Schwab, other firms may create their own symbol format, exclusive to their trading platforms. Such symbols are not recognized by Schwab’s systems. The only format that Schwab can recognize, besides Schwab’s own format, is the standard 21-character industry standard symbol.

Important dates

• When are these changes taking place?

  The transition to the new symbol format is happening in two phases. The first phase, which is known as “conversion,” has already taken place. This phase consisted of switching all options symbols from the old 5-character symbol format to the new 21-character symbol format. Schwab underwent conversion on January 23, 2010.

• Can you explain the second phase of these changes, known as the “consolidation process”?

  For the second phase, the OCC will initiate a process known as “consolidation,” which should last 3 to 4 months. During this period, options with root symbols that are different from the underlying ticker symbol will go through a multistep consolidation process, after which the root symbol will match the underlying ticker symbol.

  Please review the following information to understand the consolidation process. First, we’ll start off with root symbols.

  Understanding what root symbols are
  All option symbols have a root symbol. These are the characters that signify the underlying security the option represents.
  AAQED
  1
  Root symbol	The first data element, AAQ, is the root symbol. The underlying security for AAQ is Apple, which has a stock ticker symbol of AAPL.
  AAQ

  In the example above, the first data element, AAQ, is the root symbol. The root symbol signifies the underlying security of the option contract, which in this example is Apple.

  There are two types of root symbols.

  The first type contains the actual ticker symbol of the underlying company, ETF, or index. A few examples shown in the table below include IBM, Southwest Airlines, and 3M. Option symbols with this type of root symbol have converted to the new symbol format at Schwab at conversion, and do not need to go through the consolidation process. They have reached their final state with the conversion.

  Option root	Stock symbol	Company
  • IBM	• IBM	• IBM
  • LUV	• LUV	• Southwest Airlines
  • MMM	• MMM	• 3M

  The second type contains letters that differ from the ticker symbol. A few examples shown below include Apple, Google, and Oracle. These types of symbols are the ones that will need to go through the consolidation process so that eventually their root symbols are the same as the ticker symbol.

  Option root	Stock symbol	Company
  • AAQ	• AAPL	• Apple
  • GOQ	• GOOG	• Google
  • ORQ	• ORCL	• Oracle

  There are multiple stages to the consolidation process. After the initial conversion the options that need to go through consolidation will be in a hybrid state, for an interim period.

  This means that these options will have the new, longer format, but they will still be using the old root symbol—instead of the actual ticker symbol. Some symbols will be in a hybrid state longer than others, depending on when the OCC schedules them for consolidation.

  Original symbol: AAQED
  Industry standard symbol	Schwab’s symbol
  After conversion but before consolidation:	After conversion but before consolidation:
  AAQ   100522C00020000	AAQ 05/22/2010 20.00 C
  The symbol has changed to the new format, but still retains the old root symbol.
  After consolidation:	After consolidation:
  AAPL  100522C00020000	AAPL 05/22/2010 20.00 C
  The root symbol has changed from AAQ to AAPL, the underlying ticker symbol for Apple.

  In the example above, the original symbol is AAQED. After conversion but before Apple goes through consolidation, this symbol will appear at Schwab as AAQ, but with the new, longer symbol format.

  It is only after consolidation that the symbol will use the underlying ticker symbol and reach its final state. Symbols that need to go through the consolidation process will change twice over the course of a few months: once at conversion (which is tentatively scheduled for January 23, 2010 at Schwab), and again when the root symbol gets updated through the consolidation process.

• Will I still be able to use the old symbol?

  No, they have been permanently retired. You will now need to use the new Schwab symbol format or the new industry standard format. If you try to use an old symbol, you will get an error message.

What the changes mean to you

• How will all of these changes affect me?

  We have created a special table that summarizes the highlights of these changes, which can be viewed here.

  Here are the details:

  Open orders: If you had any open option orders when Schwab went through conversion, Schwab converted them to the new option symbol format on your behalf. Likewise, for all five of the consolidation events, open orders will be canceled by the options exchanges and then resubmitted. This will be done through an automated process that will be completely transparent to you, and you will not need to do anything yourself. Your order entry and expiration dates will remain the same.

  Brackets and trailing stop orders (StreetSmart.com^® and StreetSmart Pro^®): All brackets and trailing stop orders placed on options symbols were canceled by Schwab at the conversion. In addition, brackets and trailing stop orders with an option symbol that has an underlying ticker symbol going through consolidation will be canceled at that particular consolidation event. These orders show up in the Order Status window with a status of ”contingent.”

  • If you have a bracket on an open order that has not yet filled prior to any of these dates, you will need to reestablish the bracket. (The bracket’s primary order will have been converted to the new symbol format.)
  • If you have an open bracket on a position that has executed already, you will have to use the Alerts & Conditional Orders tool to establish a similar exit strategy using the same criteria available with brackets. Keep in mind that alerts and conditional orders do not function in the same way as brackets. For more information on alerts and conditional orders, please visit the Alerts section of StreetSmart Pro’s online help and/or the Conditional Orders & Alerts section of StreetSmart.com’s online help.
    Please note: Brackets cannot be reestablished on positions post-execution unless the filled order is still showing up in the Order Status window.
  • After each of these consolidation events, you will need to reestablish your trailing stop orders in the next trading session for “day” orders, or as a GTC (good-till-canceled).
  • We strongly encourage you to copy or print your orders prior to these consolidation events so that you can easily re-create your orders after they are canceled. For brackets and trailing stop orders, simply go to the Order Status tab of the Account Details screen and then select File > Print.

  Alerts and conditional orders (StreetSmart.com and StreetSmart Pro): All activated untriggered alerts and alerts with conditional orders with the former options symbols were deactivated by Schwab at the conversion. In addition, activated untriggered alerts and alerts with conditional orders with an option symbol that has an underlying ticker symbol going through consolidation will be deactivated at that particular consolidation event.

  • You will need to edit your alerts and alerts with conditional orders by using the new options symbols, then activate the edited alerts after each of these events.
  • To edit and activate an alert on StreetSmart Pro, go to the Alerts tab of the Account Details screen. Find the alert you need to modify, and then either right-click on it and select “Edit,” or simply double-click it to open the Alert window. After changing the option symbol to the new format, click the OK button in the dialogue window, right-click the alert, and then select “Activate Selected.”
  • After changing the option symbol to the new format, click the OK button in the dialogue window, right-click the alert, and then select “Activate Selected.” To edit and activate an alert on StreetSmart.com, go to the Conditional Orders & Alerts tab. Find and click on the alert you need to modify and then select “Edit.” After changing the option symbol to the new format, click the Save Changes button. Upon accepting the confirmation, your alert will be activated.

  Watch lists and stock lists: Options using the original symbol format became invalid in any watch list or stock list after the conversion and need to be replaced by you. You will need to do this again at the consolidation events if an option on any of your lists goes through consolidation.

• What do adjusted options look like?

  Symbols for adjusted options have changed to the new format, but also use numbers as a part of the underlying stock, ETF, or index ticker symbol to denote that it is an adjusted option. The number is attached to the end of the ticker symbol in both the industry standard symbol and the Schwab symbol. The rest of the symbol is identical to that of a regular option. For example, here is how a hypothetical adjusted option looks in both formats through the entire (conversion and consolidation) process:

  Original adjusted options symbol: QAAVJ
  Industry standard symbol	Schwab’s symbol
  At conversion but before consolidation:	At conversion but before consolidation:
  QAA  101016P00050000	QAA 10/16/2010 50.00 P
  The symbol has changed to the new format, but still retains the old root symbol.
  After consolidation:	After consolidation:
  AAPL1 101016P00050000	AAPL1 10/16/2010 50.00 P
  In the hypothetical example above, you’ll see that a “1” was appended to the end of the ticker symbol “AAPL.” Whenever you see a number attached to the end of a ticker symbol, that means that the option is an adjusted option.

• What do index options look like?

  Symbols for index options are identical in appearance to regular options. For example, here is how a hypothetical index option looks in both formats after going through the entire (conversion and consolidation) process:

  Original index options symbol: DJNTI
  Industry standard symbol	Schwab’s symbol
  At conversion but before consolidation:	At conversion but before consolidation:
  DJN  100821P00045000	DJN 08/21/2010 45.00 P
  The symbol has changed to the new format, but still retains the old root symbol.
  After consolidation:	After consolidation:
  DJX  100821P00045000	DJX 08/21/2010 45.00 P
  This hypothetical example uses the Dow Jones Industrial Average index option, DJX, traded on the Chicago Board Options Exchange (CBOE).

• Will the new symbols be displayed in trade confirmations and statements?

  Yes, they will. The new Schwab symbol format will be used anywhere the original symbol appeared. This includes trade confirmations and statements. Because of the longer length of the new symbol format, clients may sometimes see the symbols “wrap,” or print on two lines.

  Transactions completed prior to the conversion date will be displayed in your statement using the original symbol format. Transactions undertaken after conversion will be displayed with the updated Schwab symbol format.

  The same applies to transactions that are conducted with options that are going through the consolidation process. Any transaction completed prior to an option’s consolidation date will be displayed in your statement in its hybrid state, with the old root symbol but the new Schwab symbol format. Transactions undertaken after consolidation will be displayed in your statement with the updated root symbol in the new Schwab symbol format.

• Which symbol will be displayed in the transaction history?

  Transactions completed prior to the conversion date will be displayed in the transaction history using the original symbol format. Transactions undertaken after conversion will be displayed in the transaction history with the new Schwab symbol format.

  The same applies to transactions that are conducted with options that are going through the consolidation process. Any transaction completed prior to an option’s consolidation date will be displayed in its hybrid state, with the old root symbol but the new Schwab symbol format. Transactions undertaken after consolidation will be displayed with the updated root symbol in the new Schwab symbol format.

  Examples:

  How symbols will be displayed in the transaction history
  When the transaction was conducted	Symbols that will not go through consolidation	Symbols that will go through consolidation
  Prior to conversion	IBMHN	AAQED
  After conversion	IBM 08/21/09 70.00 C	AAQ 05/22/2010 20.00 C
  Before consolidation		AAQ 05/22/2010 20.00 C
  After consolidation		AAPL 05/22/2010 20.00 C

• Which symbol will be displayed in gain/loss reporting?

  For unrealized gains and losses, all positions or trades listed will be converted so that they display the new Schwab symbol.

  For realized gains and losses, transactions completed prior to the conversion will be displayed using the old symbol format. Transactions completed after the conversion will display using the new Schwab symbol.

  The same applies to transactions that are conducted with options that are going through the consolidation process. Any transaction completed prior to an option’s consolidation date will be displayed in its hybrid state, with the old root symbol but the new Schwab symbol format. Transactions completed after consolidation will display with the updated root symbol in the new Schwab symbol format.

  An easy rule of thumb to remember is that however an option symbol is displayed to you when the transaction is completed is how it will appear in your realized gain/loss reporting.

• Will I still be able to trade options by wireless?

  Yes, Schwab is upgrading the wireless trading platform to accommodate the new symbol format. We are working on creating a special page that details the changes being made to wireless. We will update this answer when that page becomes available.

• Will I still be able to trade options with TeleBroker^®?

  You will still be able to trade options and get quotes with Schwab’s voice channel, TeleBroker. You will encounter a new method for entering the longer options symbols in the TeleBroker menu. We are working on creating a special page that details the changes being made to TeleBroker. We will update this answer when that page becomes available.

• Will I be able to download the new options symbols to my Quicken^® or Microsoft Money^®?

  Yes, you will. We are working on creating special instructions that explain what you need to do to accommodate the new symbol format for both Quicken and Microsoft Money. We will update this answer when those instructions become available.

• How will I handle a transfer of options into Schwab with the new options symbols?

  When completing Schwab’s TOA (Transfer of Account) form, if you are submitting a full transfer, it is not necessary to list the options symbols individually. If you are submitting for a partial transfer, you will need to list the options symbols individually on the transfer form. You will use the symbols that appear on the statement provided to you by the brokerage firm where the options you want to transfer are currently housed. Once the options have been transferred into your Schwab account, they will be displayed using the Schwab symbol format.

  Please note that your cost-basis information may or may not automatically accompany the transfer of your options, depending on the type of systems in use at the brokerage firm you are transferring from. If Schwab fails to receive this information, you will need to manually enter it into your account at Schwab.

Changes to trading platforms

• How will my trading experience be affected by these changes?

  Your overall options trading experience is not changing significantly. In addition to making updates to our systems to support the new symbol format, we’ve made several key enhancements to the options trading experience to make it easier for you to enter option symbols into various places throughout our trading platforms. We’ve developed several tutorials to help explain these changes and enhancements.

  Schwab’s systems will have some flexibility in recognizing incorrectly entered options.
  Upgrades to Schwab’s trading platforms will allow our systems to recognize some variations of the Schwab symbol, should they be entered incorrectly. If our system finds an appropriate match, it will reformat the incorrect entry and accept the symbol.

  Specific platform changes and enhancements:

• Schwab.com

  There is no need to enter the entire Schwab options symbol on Schwab.com.

  Schwab’s Symbol Autocomplete tool, which automatically appears when you begin to enter a symbol in entry boxes, such as for quotes or trade orders, has been updated to handle the new symbol format. An Options Symbols link automatically appears next to one of the symbol suggestions if there are options traded on the stock or index. Clicking this link brings up an options mini-chain for you to use to find the option you are looking for. The tool is integrated with the page you are viewing, so you don’t have to move to another page or pop-up in order to use it.

  A new alternative symbol-entry method on Schwab.com.

  Schwab has introduced a new tool that can also assist you when entering options symbols on Schwab.com. This tool is part of the Order Entry page on Schwab.com. You can specify the 4 individual elements of the option on the Order Entry page as an alternative to using the Symbol Autocomplete tool: the underlying symbol, expiration date, strike price, and whether it is a call or put. An example of this tool, plus an overview of other changes being made to Schwab.com to accommodate the new symbol format, can be viewed in the tutorial we’ve created. Click here to view the tutorial.

  Improvements to the options chains interface on Schwab.com.

  We’ve implemented some significant improvements to the Options Chains tool on Schwab.com:

  • The results functionality of the Options Chains page has been improved so that all available options that are listed as the result of an inquiry are presented on the same page instead of on separate pages.
  • You can view multiple valid expiration dates, rather than an expiration month which may or may not be trading.
  • You can specify a range of strike prices, and utilize pre-set selections to view “All strikes” or those that are “Near the money.”
  • Options expiration dates are now provided with the results, along with the number of days left until expiration.
  • Changes made to your options filters are now visible instantly.
  • When you select an option, a real-time quote for that option is displayed at the top of the page rather than on a separate page.
  • After you select an option, you can now proceed directly to the Order Entry page, or you can set up a second leg directly on the Options Chains page. This second leg can be either for a Spread, or a stock leg for a Buy-Write. Once both legs are chosen, you can click the Trade link and be taken to the appropriate Spread or Buy-Write Order Entry page.

• StreetSmart.com^®

  There is no need to enter the entire Schwab options symbol on StreetSmart.com.

  Schwab’s Symbol Autocomplete tool, which automatically appears when you begin to enter a symbol in entry boxes, such as for quotes or trade orders, has been updated to handle the new symbol format. An Options Symbols link automatically appears next to one of the symbol suggestions if there are options traded on the stock or index. Clicking this link brings up an options mini-chain for you to use to find the option you are looking for. The tool is integrated with the page you are viewing, so you don’t have to move to another page or pop-up in order to use it.

  Adjusted option details have changed.

  Adjusted option details now appear on the Options Basic Trading page. If you place trades on adjusted options from this page, you can view the deliverables of the specific contract without leaving the page.

  Tutorial

  We’ve created a special tutorial for StreetSmart.com users, which shows you some of the changes being made to accommodate the new symbol format. Click here to watch the tutorial.

• StreetSmart Pro^®

  It is now easier to add alerts.

  Load option symbols in an Alert or Conditional Order with the right-click menu. When right-clicking on a new Schwab option symbol, the Apply Alert menu choice now loads the new option symbol into the Add Alert or Conditional Order dialogue box instead of loading just the underlying stock. This makes adding an alert or conditional order much easier, especially since options symbols are much longer in length.

  The Combo Order page has been redesigned.

  The Combo Order page, which resides under the Advanced Options Trading tab, was redesigned to facilitate order entry. It also presents quote information in a more user-friendly format.

  Tutorial

  We’ve created a special tutorial for StreetSmart Pro users, which shows you some of the changes being made to accommodate the new symbol format. Click here to watch the tutorial.

Questions? Comments?

• Who should I contact if I have more questions or concerns?

  We realize that this is a lot of information to process, and that you may have additional questions or concerns. To discuss your questions with Schwab investment professionals, please call 415-667-8400. You can also send us an email.