The Options Symbology Initiative
What is OSI?
The Options Symbology Initiative (“OSI”) was a comprehensive plan to replace the former archaic option root identification method for exchange-listed option contracts with a 21-character symbol containing the underlying stock symbol, expiration date (including the day), a call/put identifier and the strike price - dollar and cents.
Why is this necessary?
The former OPRA-based (Option Price Reporting Authority) methodology resulted in a number of complexities and errors between front and back-office processing. OSI alleviated those errors and also eliminated the need for the LEAP (Long-term Equity Anticipation Security) rollover process.
Why should you know this?
Even though OSI is a standard mandated by the OCC, unfortunately not all brokers abide by those standards, especially when reporting weekly options.
Having a standard naming convention across brokerages is an excellent method to track all securities traded, especially if trading using multiple brokerages. It will signficantly prevent errors and help you to identify and test for wash sales.
So what will the new symbols look like?
Following is an example of how the new symbols will be reflected in your downloads from your broker.
The new symbology should facilitate easier identification of option trades and corresponding opening and closing transactions.
Note: Some data providers/brokers do not include a closing option transaction (BTC or STC) in their downloads upon expiration ... the option just disappears. A closing transaction needs to be generated so that the opening transaction will not be recognized as “Open” at year-end.
Being able to "tie-out" or agree your open positions as of year-end to the year-end statement provided by your broker is a critical factor in determining if all your trades have been captured and reported properly.
However, as always, there is a potential problem with this as well. Brokers typically report transactions based on settlement date whereas tax reporting is based on trade date. Therefore, there my be some discrepancies in your year-end reporting positions versus what is reported on Form 1099B.
For the do-it-yourselfers, I have developed a template that will recognize and add a closing transaction for your unmatched open position upon expiration.
An exciting innovation by the CBOE (Chicago Board Option Exchange) are the new weekly expiration series of options for various larger capitalization stocks.
Even further, multiple weekly series are now available. For instance, there can be weekly options available for the first, second, regular monthly expiration, fourth and possibly fifth week. In my opinion, the more option series available the better … especially for Traders!
Weeklies expire on Friday and not Saturday, like regular monthly options, which, in my opinion, make weeklies more advantageous than monthlies, especially when close to the money on option expiration Friday.
Unfortunately, the CBOE and some brokers use different OSI symbols for weeklies. The obvious format would be for the Day designator in the OSI symbol to be the Friday of the weekly option’s expiration. However, the CBOE and some brokers use letters to designate weeks, which makes it more difficult to determine option positions, for wash sale purposes, across brokers - for those having multiple accounts. In my opinion, this is a step backwards to the older and discarded OPRA option symbol style noted above in the AAPL example.
Following would be the more proper method to reflect weekly option formats and differences to monthlies:
Adding Closing Transactions
Currently this webhost does not allow downloading of .xlsb files ... please email me if you are interested.