Option Class

An option class is a group of options that have the same underlying asset, expiration date, and strike price. The only thing that differs between options in the same class is the type of option. For example, one option in the class could be a call option, while another option could be a put option.

Option classes are important because they allow investors to trade options with different risk profiles. For example, a call option gives the buyer the right to buy the underlying asset at a certain price, while a put option gives the buyer the right to sell the underlying asset at a certain price. If the underlying asset price goes up, the call option will increase in value, while the put option will decrease in value. Conversely, if the underlying asset price goes down, the call option will decrease in value, while the put option will increase in value.

Option classes are also important because they allow investors to hedge their positions. For example, an investor who owns shares of a stock could buy a put option on the stock to protect themselves from a decline in the stock price. If the stock price does decline, the put option will increase in value, which will offset the loss on the stock.

Option classes are created by the Options Clearing Corporation (OCC). The OCC is a self-regulatory organization that oversees the options market. The OCC assigns a unique symbol to each option class. For example, the symbol for the SPX 100 call option with a strike price of $100 and an expiration date of January 2023 is SPX100C202301.

Option classes are an important part of the options market. They allow investors to trade options with different risk profiles and to hedge their positions.