Contract markets have offered binary options based on catastrophic events as well as on certain economic indexes such as the Consumer Price Index (CPI). In France, Germany and Austria, binary options have been traded OTC in a one-sided market between investors and an institution. The institution in these cases is the issuer of the contract and establishes, if applicable, the market for the binary option.OTC binary options have several drawbacks and disadvantages. One disadvantage is that OTC binary options are typically offered by an institution on a non-fungible basis so that a customer can purchase the option only from the institution, and cannot easily resell to a third party because they are not standardized or traded on an exchange. As a result, OTC binary options, as compared to standardized exchange-traded options, lack important attributes of a trading market such as transparency and liquidity.An example of the organizational structure of an exchange such as those on which some options are currently traded is illustrated in FIG. 4. Customers 410, through their broker/dealers 415, can offer to buy or sell an option. Organized exchanges typically facilitate the trading of options through a combination of electronic systems for order routing 420, matching 435 and execution and/or floor-based auction trading conducted using an open outcry method, by which competing floor brokers representing public orders and market makers trading for their own accounts, make bids and offers on the trading floor. Typically, in the floor-based model, trading takes place at a post consisting of a specialist 430 or designated market maker and trading crowd 425. The American Stock Exchange (Amex) employs a modified specialist system. The specialist post 430 is a specific location on the trading floor of the Exchange designated for the trading of a specific option class. Each option traded at a particular post is managed by an assigned specialist. A specialist is an Exchange member whose function is to maintain a fair and orderly market in a given option class. This is accomplished by managing the limit order book and making bids and offers for his own account in the absence of opposite market side orders, i.e. providing continuous two-sided markets. Other options exchanges have similar structures for trading options, whether electronic or on-floor.By law, standardized equity options traded in the United States may only occur on a national securities exchange registered with the SEC. Options traded on national securities exchanges are generally traded based on an underlying equity or index meeting approved listing standards that have an appropriate pricing mechanism. For example, stock options are traded during the normal hours of operation of U.S. securities exchanges.All standardized options in the United States are issued, cleared, settled and guaranteed by the Option Clearing Corporation (OCC) 445. This organization is equally owned and supported by all U.S. options exchanges. The OCC is able to recognize, segregate, calculate and disseminate information from the various exchanges, and to facilitate the fungibility described above in large part due to the standardized symbology scheme detailed below. Systems for calculating delivery and payment amounts due between participating parties rely on this standardization.Options that are traded on national securities exchanges are standardized, and therefore fungible through the use of identical contract terms (such as expiration cycles) and pre-defined parameters. For example, all non-FLEX exchange-traded securities options expire on the Saturday following the third Friday of any given month. The issuer of each option contract is the OCC regardless of where the option trades. A writer of a standardized option cannot create or choose a different expiration date. The writer cannot change or define any strike price, but for any given option, must select from a specific set of available strike prices. Similarly, not all expiration months are simultaneously available for all standardized option series.One convention that is central to the standardization of options is an agreed-upon scheme by which all options exchanges assign and attach symbols. The convention allows for options to have symbols with a maximum of 5 characters. Each character has 26 possibilities, corresponding to the 26 letters of the alphabet. The first one, two or three characters (known as the root symbol) denote the underlying asset for the option. In some cases this corresponds exactly to the underlying assets trading symbol, in other cases there is no relationship between the two. The next character/symbol denotes two pieces of informationwhether the option is a put or a call, and the month of expiration. These codes are listed in table I. The final character denotes the strike price for the option. The strike price codes are listed in table II.TABLE I Expiration Month Codes Next-to-last Character - Expiration Month Codes Month Call Put January A M February B N March C O April D P May E Q June F R July G S August H T September I U October J V November K W December L XTABLE II Strike Price Codes Last Character - Standard Strike Price Codes Code Strike Prices A 5 105 205 305 405. B 10 110 210 310 410. C 15 115 215 315 415. D 20. 120 220 320 420. E 25 125 225 325 425. F 30 130 230 330 430. G 35 135 235 335 435. H 40 140 240 340 430. I 45 145 245 345 435. J 50 150 250 350 450. K 55 155 255 355 455. L 60 160 260 360 460. M 65 165 265 365 465. N 70 170 270 370 470. O 75 175 275 375 475. P 80 180 280 380 480. Q 85 185 285 385 485. R 90 190 290 390 490. S 95 195 295 395 495. T 100 200 300 400 500. U 7 107 207 307. V 12 112 212 312. W 17 117 217 317. X 22 122 222 322. Y 27 127 227 327. Z 33 133 233 333 433.Generally, there are several expiration months available for each equity option. Moreover, there are several strike prices available for each expiration month of each option. Therefore, for a single stock there are often several options series traded and it is not unusual to have 60 different options series available for a single stock or options class.