Reading an Option Chain

What this unit covers

Take a guided walk through a real option chain, its strikes, premiums, open interest and volume, so it stops looking like an unreadable spreadsheet.

By the end you will be able to

• Explain that an option chain repeats the same row and columns for every strike.
• Locate the underlying price and the ATM strike on a real option chain.
• Read open interest and volume as signals of participation, not direction.

How it starts: A Screen Full of Numbers

1. You open a screen showing over 40 rows of strike prices at once.
2. Every row repeats the same columns, and none of them are labelled for you.
3. Which two or three numbers on this screen would actually tell you something?

Words you will meet

Option chain

A table listing all call and put contracts for one underlying, organised by strike price.

Strike price

The fixed price at which an option contract can be bought or sold later.

ATM (at the money)

The strike price closest to the current price of the underlying stock or index.

Open interest

The number of option contracts currently open, or held, at a given strike.

Volume

The number of contracts traded at a strike so far in the current trading day.

Premium

The price quoted to buy or sell one call or put contract at a given strike.

In this module: Volatility & Option Chain

1. Implied and Realised Volatility
2. India VIX and Volatility Context
3. Reading an Option Chain (this unit)
4. Open Interest Context and Its Limitations