Countless numbers of securities are traded around the world each day, based on a series of numbers and letters known as ticker symbols. These symbols vary based on the type of security being traded and the exchange on which it trades. A stock symbol is one ticker symbol sub-type used to identify stock.
A ticker symbol is an arrangement of characters, typically letters -- although numbers do appear in certain types of security symbols -- that represent a specific company, the type of security and its exchange listing. For example, Apple Inc.'s stock symbol is "APPL." Symbols are chosen from a list of available options when a company first issues a security. Investors rely on this coding to find information about a particular security's performance throughout the trading day. Likewise, this information is also used by traders when placing trades.
Because each ticker symbol is composed of a combination of information that's unique to a specific security, no two are alike. Until 2007, stocks that traded on the NYSE could be identified by their three-letter stock symbol, with those on NASDAQ marked by four-letter symbols. According to USA Today, however, about 92 stocks currently trade on the NYSE with four or more symbols. Preferred stock can be even more confusing, as symbols can vary dramatically from one brokerage or exchange to another.
Stocks valued below $5 a share are denoted by a ticket and stock symbol ending in ".PK," such as Blockbuster, which trades as BLOAQ.PK. Options -- company stock sold in 100-share bundles -- have their own unique ticker symbols. These symbols represent the underlying stock, the option expiration date, and whether the option is a call (buy) or put (sell). Mutual funds, which can be searched by name or fund family, have ticker symbols that consist of a combination of numbers and symbols, ending with the letter "x" to differentiate them from stocks.
Certain types of ticker symbols can be confusing, especially for traders with a limited amount of time to process multiple transactions. As more companies issue stock for trading, and the symbolatry of securities becomes more complex, some investors believe that a push toward a more uniform ticker symbol system may become inevitable. Until then, investors must rely on the current system of numbers and letters that make trading possible on a day-to-day basis.