Stock Symbol

Shortened abbreviation of a security that is publicly traded

A stock symbol, or a ticker, is a shortened abbreviation of security that is publicly traded. This abbreviation can include letters, numbers, or a combination of both.

This symbol is a unique identifier used to represent publicly-traded companies in a specific market.

Stock symbol

The abbreviation depends on the stock exchange to which the company belongs. For example, on the New York Stock Exchange (NYSE), a company's ticker symbol generally consists of up to four letters.

Another example is the Nasdaq Stock Exchange, where these symbols can be up to 5 characters.

These abbreviation guidelines also change from country to country. For example, in Europe, most exchanges use tickers with three letters. 

In Asia, numbers are more common as ticker symbols to avoid issues with using a different alphabet. This makes international investing more accessible. For example, on the Hong Kong Stock Exchange, HSBC's ticker symbol is "0005". 

Letters are more commonly used as ticker symbols in the rest of the world.

The specific length of ticker symbols has no significant meaning but is a shorthand way of identifying a company's stock.

The symbol is up to the company's discretion. Still, it can be rejected by the stock exchange in instances where the ticker is offensive, the same as another company, or misleading.

The ticker symbol's letters are often in the company's full name. For example, Apple stock is abbreviated as "AAPL." However, a contrasting example is Southwest Airlines' abbreviation "LUV." 

Stock symbols are also helpful in distinguishing the difference between two similar company names. For example, in 2015, Hewlett-Packard split into two separate companies. These two companies became Hewlett Packard Enterprise (HPE) and HP Inc. (HPQ).

All publicly-traded companies are required to have a ticker symbol that has been approved by the stock exchange that they are traded on. As a result, companies generally brainstorm two to three ticker options when they apply in the event that their first choice gets rejected.

Origin

In the 1800s, human stock trading was done solely by humans, without the advanced technology we have today. 

Stock brokers had to shout the price and name of traded companies in a busy environment, which led to the shorthand notation of stock symbols. Writing and shouting out the full names of companies became exhaustive as the total number of traded companies skyrocketed.

This method of communication was too time-consuming in a profession where prices are invariably changing.

Newspaper

As a result, Edward Calahan invented the stock-quoting ticker tape machine in 1867. This machine used telegraph networks and converted signals to letters or numbers. These alphabetic symbols and the stock transaction price were printed on the tape.

The term "ticker" comes from the machine's sound when printing.

This invention was revolutionary because it allowed for easier communication of a company's stock price changes to investors. The stock price could be updated and communicated at shorter time intervals than before.

Before this invention, information from the New York Stock Exchange was delivered either by mail or messenger, which could take days.

Today, the shortened symbols to represent companies are still used, but technology made the physical ticker machine obsolete by the 1960s. These symbols are now digital displays.

The advancement of ticker symbols was accompanied by regulations that determine a company's symbol:

  • The symbol must not already be in use or closely resemble another ticker. For example, a proposed symbol of JJJ may be rejected if another company already uses JJH.
  • The symbol must be appropriate and not have any unprofessional connotations. For example, a ticker such as NUDE would be rejected.
  • The length of the ticker must abide by the guidelines of the respective stock exchange. For example, a proposed symbol that is six characters would be rejected by the New York Stock Exchange because it requires that tickers be up to a maximum of 4 letters. 

Types of Stock Symbols

There are five types. Understanding the different types can ensure you comprehend what type of investment you are looking at.

1. Common Stock Symbols

These are the most abundant stock tickers. These consist of letters or numbers that abide by the guidelines of the exchange the stock is traded.

Wall Street

Common stock is a type of security that ensures partial ownership of the company and voting privileges regarding the election of the board of directors and corporate policies. Many companies only have this one class of stock.

Examples:

  • AAPL (Apple Inc. Common Stock)
  • MSFT (Microsoft Corporation Common Stock)
  • AMZN (Amazon.com, Inc. Common Stock)
  • TSLA (Tesla, Inc. Common Stock)
  • JNJ (Johnson & Johnson Common Stock)

A list of all the common stock Nasdaq ticker symbols can be found here.

2. Stock Tickers with Modifiers

Some ticker symbols are followed by an additional letter. This additional letter represents the security's asset class, trading restriction, or stockholders' privilege. Each letter has a distinct significance.

NASDAQ Fifth-Letter Codes and Other Special Codes
A- Class "A"K- Nonvoting (common)U- Units
B- Class "B"L- Miscellaneous Situations (i.e., stub)V- Pending Issue and Distribution
C- NextShares Exchange Traded Managed FundsM- Fourth Class - Preferred SharesW- Warrants 
D- New issue or reverse splitN- Third Class - Preferred SharesX- Mutual Fund
E- Delinquent SEC Filings (no longer used by Nasdaq)O- Second Class - Preferred SharesY- American Depositary Receipt (ADR)
F- Foreign IssueP- First Class - Preferred SharesZ- Miscellaneous Situations
G- First Convertible BondQ- Bankruptcy (no longer used by Nasdaq)Special Codes-
H- Second Convertible BondR- Rights issuePK- Pink Sheets Stock
I- Third Convertible BondS- Shares of Beneficial InterestSC- Nasdaq Small-Cap
J- Voting share-special situationT- Securities with Warrants or RightsNM- Nasdaq National Market

These aforementioned letters are preceded by a period. For example, Berkshire Hathaway Class A stock is represented by "BRK.A."

Many of the terms in the table above can be found in the Nasdaq Glossary.

3. Creative Stock Symbols

These tickers tend not to represent the company's name but are more unique. These symbols highlight the company's product, vision, norms, culture, or unique selling proposition.

Examples:

  • BOOM (Dynamic Materials Corporation)
  • BEN (Franklin Resources, Inc.)
  • FAN (Global Wind Energy)
  • TAN (Guggenheim Solar)
  • HOG (Harley-Davidson Motorcycles)

These tickers tend to be more catchy and clever, sometimes with a humorous element.

 

Trading

4. Option Ticker

This symbol represents the underlying stock's put or call classification. This ticker includes:

  • Company ticker
  • Expiration date
  • Type of option (put or call)
  • Strike price

For example, a Nike option ticker example could be "NKE220624C00099000". 

  • The first part (maximum of 6 characters) is the ticker symbol for the underlying stock. In this example, that is "NKE."
  • The second part is the expiration date of the option in the format: (yy)(mm)(dd) in this example, that is "220624", or June 24, 2022.
  • The third part is the call (C) or puts (P) indicator. A call is a contract to buy, and a put is a contract to sell a stock. In this example, the "C" indicates that it is a call option.
  • The fourth part is the strike price. It will always be eight digits, so to get the strike price, you divide the 8-digit number by 1,000. In this example, the call price is $99.

5. Mutual Fund Tickers

This symbol can include both numbers and letters. For example, mutual fund tickers typically have five letters and end with an "X." This symbol is generally longer because many financial institutions have various mutual funds with similar names.

Examples:

  • VSMPX (Vanguard Total Stock Market Index Fund)
  • VFIAX (Vanguard 500 Index Fund)
  • FXAIX (Fidelity 500 Index Fund)
  • SPAXX (Fidelity Government Money Market Fund)
  • FGTXX (Goldman Sachs FS Government Fund)

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Researched and authored by Jackson Hartz | LinkedIn

Reviewed and edited by James Fazeli-Sinaki | LinkedIn

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