Options Symbology Initiative: The symbols used to trade options are changing soon. Here is how Fidelity explains the changes:

Options Symbology Initiative (OSI)

Background

Due to the significant growth of the option market, the Options Clearing Corporation (OCC) has enacted an industry-wide initiative known as the Options Symbology Initiative (OSI). Fidelity will be implementing changes during the weekend of January 23, 2010. The new options symbology will expand the current option series key, commonly referred to as the OPRA symbol, from a 5 character convention to a new key that accommodates up to 22 characters.

Benefits of the symbol change

• It will be easier to identify a contract’s underlying security, original expiration date, call or put, and strike price without the use of code-translation tables. It provides more flexibility than the OPRA symbols. The new convention allows for the addition of unique identifiers for new issuers, for the indication of expiration days other than the standard monthly expiration, and for adjusted contracts. It will also indicate more precise and varied strike prices.

How this change affects you

• The main impact to you as a Fidelity customer will be learning the new symbology. Below is a guide that explains this new symbology and the important dates that you need to know.
• Existing functionality in Fidelity.com and Active Trader Pro will not change. You will still get quotes, place trades and do your analysis in the same way you did before this change. The only difference is you will now use the new OSI symbol in place of the 5 character OPRA code. If you choose not to input the new OSI symbol you can use the option chain to bring up quotes, click to trade, or use the drop down menus for quick and easy point-and-click access.

For more in-depth information concerning the Option Symbology Initiative you can go to the following industry website: http://www.theocc.com/initiatives/symbology/default.jsp.

Proposed Timeline

To allow for a more orderly transition from old symbology to new symbology, the OCC will use a two-phased approach. Phase One, Conversion, will roll out elements of the new symbology. Phase Two, Consolidation, will introduce all aspects of the new convention and will complete the process.

Phase One weekend of January 23, 2010

Phase One involves converting the old OPRA-based symbology to the new OSI symbology and its 4 key fields: Option Root Symbol, Expiration Date, Call/Put Indicator and Strike Price.

For example:

The old symbol (OPRA) of -VMFAY for a Microsoft January 22, 2011 27.50 Call will be -VMF110122C27.5 as a new symbol (after Conversion).

Phase Two March 12, 2010 through May 14, 2010

Phase Two involves simplifying the root symbols. The multiple-option root symbols currently used to identify options will be replaced by the symbol of the underlying stock.

For example:

The new symbol (after Conversion) of – VMF110122C27.5 for a Microsoft January 22, 2011 27.50 Call will be -MSFT110122C27.5 as a final symbol (after Consolidation).

Below is a detailed look at the upcoming changes. Please carefully review the following symbol formats and timelines.

Phase 1: What is Conversion? weekend of January 23, 2010

It is the date that the OLD SYMBOLOGY becomes “inactive” and the NEW OSI SYMBOLOGY becomes “active” for all processes. At Fidelity we plan on switching to the new OSI format during the weekend of January 23, 2010. The first options trading day you will see and use the new symbol format will be January 25, 2010. The industry mandated cutover date is February 12, 2010.

What does this mean for you?

Until the weekend of January 23, 2010 you will continue to get quotes and place orders under the current symbology. On January 25, 2010 you will get quotes, analyze options, and place orders using the new symbology.

Phase 2: What is Consolidation? March 12, 2010 through May 14, 2010

The second stage, Consolidation, will start March 12, 2010. Consolidation is the process of consolidating option symbols that share the same underlying symbol. In nearly all cases, the resulting symbol will be the same symbol as the underlying symbol being delivered. For example, all LEAPS, wraps, short dated symbols with an underlying of MSFT and their respective series will be converted to MSFT. Furthermore, the standard MSQ series will be converted to MSFT.

There are a few known exceptions to the consolidation strategy above. One is for previously adjusted options with non-standard terms of delivery. The strategy for consolidating these nonstandard options is to convert the symbol to the primary underlying appended by a single integer. The initial integer being appended will be the number “1”, and incremented for subsequent non-standard options. For example, MSZ is the result of a prior adjustment and has multiple deliverables with the primary deliverable being MSFT. When Microsoft options are consolidated, MSZ options would become MSFT1. The planned date for consolidation of non-standard or adjusted options is: March 12, 2010.

The goal of this approach is to have all classes consolidated prior to June 2010. Here is the schedule for consolidation. The dates below are the days the options will be trading under the consolidated and FINAL symbol.

Stocks	Consolidation Date
A	April 9, 2010
B – G	April 23, 2010
H – O	May 7, 2010
P – Z	May 14, 2010

Option Symbology Key

It is important to note that Fidelity.com, ActiveTrader Pro and OptionTrader Pro will continue to offer existing functionality in the same manner as you are currently accustomed. The only change will be the symbol used. Below is a detailed explanation of the current option symbology and the new option series key for both conversion and consolidation.

Current options series key:

The current option series key is comprised of 3 individual data elements (Underlying, Expiration Date, and Strike Price) that collectively can be used to fully qualify a unique option. The Expiration Month and Strike Price Indicator elements are currently derived from translation tables. You will continue to use the old symbology until the cutover during the weekend of January 23, 2010.

Here is an overview of the current OPRA code symbology:

For a Microsoft January 22, 2011 27.50 Call, the current symbol is -VMFAY, where the first one to three characters represent Contract Symbol (in this case VMF translates to MSFT), the next character represents Expiration Month, and the final character represents Strike Price Indicator.

New Option Symbol Format — after Phase 1 Conversion (weekend of January 23, 2009)

The new OSI symbol format contains 4 key fields: Underlying, Date, Call/Put Indicator and Strike Price. IMPORTANT! — These 4 fields are strung together with no spaces in between to create the new OSI symbol format. During conversion the “underlying” contract symbol will be the unique root symbol used to identify the underlying in the old symbology.

For example, Microsoft, under current symbology, has several different root codes to identify the underlying. Those identifiers or root codes (-MQF, -MSQ, -WMF and -VMF) will continue to be used to identify those specific options. After consolidation, all of the unique identifiers will be converted to MSFT and adjusted options will be identified with an appended integer.

Nature of the symbol change (OSI Symbol — Up to 22 characters) — the new options symbol format will include:

For a Microsoft January 22, 2011 27.50 Call, the Conversion Phase symbol is -VMF110122C27.5, where the first one to six characters with no trailing spaces represent Underlying (in this case VMF translates to MSFT), the next six characters represent Expiration (YYMMDD), the next character represents Call/Put Indicator, and the final characters represent Strike Price.

During Conversion, the root symbol of the contract will be the underlying identifier under old/current symbology. Date is a full numeric representation of the contract’s original expiration date (YYMMDD); for example, November 21, 2009 becomes 091121 and January 16, 2010 becomes 100116. For the Call/Put Indicator, “C” is used for Call; “P” is used for Put. Strike Price is a full numeric representation, including the decimal point with fraction up to three spaces (with no trailing zeroes); for example, 100.00 becomes 100, 27.50 becomes 27.5, 37.125 remains 37.125, and 52.50 becomes 52.5.

New Option Symbol Format — after Phase 2 Consolidation (begins March 12, 2010)

For a Microsoft January 22, 2011 27.50 Call, the Consolidated (final) symbol is -MSFT110122C27.5, where the first one to six characters with no trailing spaces represent Underlying and the remainder of the symbol is unchanged from Conversion Phase.

After Consolidation, the underlying identifier will convert to the stock symbol for the underlying; for example, MQF becomes MSFT, MSQ becomes MSFT, VMF becomes MSFT, and WMF becomes MSFT.

Adjusted options will be followed by an integer to indicate that the option is non-standard.

Adjusted Options

Adjusted options will be followed by an integer to indicate that the option is non-standard. This means it represents something other than the typical 100 share deliverable when an option is issued. The first adjustment will be designated by a number “1” after the underlying symbol. The second adjustment for the same option will be designated by a number “2” and so on, if applicable. See below for detailed information on the change.

Example: Microsoft goes through a 3/2 stock split:

• Old Symbology (Microsoft Jan. 22, 2011 25 Call — represents 150 shares): -MSZAE
• After Conversion (Microsoft Jan. 22, 2011 25 Call — represents 150 shares): -MSZ110122C25
• After Consolidation (Microsoft Jan. 22, 2011 25 Call — represents 150 shares): -MSFT1110122C25

Notice that after Consolidation the number “1” now follows MSFT. This additional designation indicates that this option has undergone an adjustment and is a non-standard option.

Note: A leading hyphen is used by Fidelity to identify the instrument as an option.

Examples and company trading symbols mentioned herein are provided for illustrative purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for the security.

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