We performed a simulation of optical code generation and processing to determine the number of discriminable codes, which depends on the number of chips and the chip rate. Based on an actual optical binary phase shift keying (BPSK) code generation and processing system, the characteristics of devices in the code generation and processing with threshold processing were considered in this simulation. To handle variable BPSK codes, we used LiNbO3 (LN) modulators as an optical code generator and a transversal filter (TVF) as an optical code processor. We found that BPSK codes with 2-6 chips, 10, 20, 40Gchip/s had sufficient threshold margins for code discrimination in the simulation, and this result was in good agreement with experimental results. We performed experiments 4 chip, 10Gchip/s code generation and processing, and we experimentally confirmed the number of discriminable codes is 8.