Due to the significant growth of the option market, the Options Clearing Corporation (OCC), an institution that oversees the clearance and settlement of exchange-listed options traded on all 7 options exchanges in the U.S., has enacted an industry-wide initiative known as the Options Symbology Initiative (OSI).

The new options symbology will expand the current option series key, commonly referred to as the OPRA symbol, from 5 characters to 21 characters as part of a new industry standard format used in back-end operations, and will contain both numbers and letters.

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

• Reduce investor confusion by using the same symbol as the underlying security. With OSI, all the options of the same stock will have the same company symbol as the root symbol.
• Without the use of code-translation tables, investors can easily identify a contract's underlying security, original expiration date, call or put, and strike price.

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.

Existing functionality in Firstrade.com and Firstrade Mobile 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 the symbol format. Below is a guide that explains this new symbology and the important dates that you need to know. 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.

What Does the New Symbol Format Look Like?

Different from the current 5 character OPRA code, the new symbol format is designed to more accurately and descriptively align with the option's defining characteristics. It uses an underlying-based representation to identify each option, and contains the following components:

• Symbol - Symbol of the underlying security (e.g. GOOG for Google)
• Year of Expiration - Two-digit expiration year
• Month of Expiration - Two-digit expiration month
• Day of Expiration - Two-digit expiration date
• Strike Price - Explicit strike price in decimals
• Call/Put Indicator - Whether the option is a Call or a Put

As an example, the Google February 2010 $520 Calls (currently shown as GOPBV) will now be represented as:

When Will This Happen?

To allow for a more orderly transition from old symbology to new symbology, OPRA is implementing the new symbology in two phases. Phase One, Conversion, consists of switching of all options symbols from the old 5-character symbol format to the new 21-character symbol format. Phase Two, Consolidation, will introduce all aspects of the new convention and will complete the process.

Phase 1: Conversion: January 25, 2010

The industry-wide mandatory cut-over for phase one is February 12, 2010, by which every firm supporting options must convert to the new format. However, firms may switch prior to this date. At Firstrade we plan on switching to the new OSI format during the weekend of January 23, 2010. The first trading day you will see and use the new symbol format will be January 25, 2010.

Phase 2: 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 GOOG and their respective series will be converted to GOOG. Furthermore, the standard GOP series will be converted to GOOG.

The dates that impact Firstrade customers are as follows:

Learning the New Symbology

The following is a table of all three kinds of symbols involved during the transition. For Google (GOOG) February 2010 Calls with a strike price of $520,

An Illustration for How the Process Is Implemented

Current OPRA code

Phase 1 Conversion

Phase 2 Conversion

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Firstrade. Please read the Options Disclosure Document titled Characteristics and Risks of Standardized Options before considering any option transaction.