How to Read an Options Chain: A Step-by-Step Guide
Master reading options chains—the essential skill for finding and analyzing options trades.
What is Options Chain?
Options Chain is a table displaying all available options for a stock, organized by expiration date and strike price, showing calls on one side and puts on the other.
Also called an option matrix or option board. It's your primary tool for viewing available options and their prices.
TL;DR - Quick Answer
Options chain = table of all available options. Calls on left, puts on right. Rows = strike prices. Key columns: bid, ask, last, volume, open interest, IV. Yellow/highlighted row = ATM. Use it to find trades and compare prices.
Options Chain Layout
An options chain displays all available options for a stock in a structured table format.
Structure: Calls on the left, Puts on the right, Strike prices in the middle column.
First, select an expiration date. Then you'll see all strikes for that expiration.
Key Columns Explained
- Bid: Highest price buyers will pay (you sell at bid)
- Ask: Lowest price sellers accept (you buy at ask)
- Last: Most recent trade price
- Volume: Contracts traded today
- Open Interest: Total open contracts
- IV: Implied volatility for that strike
- Delta: How much option moves per $1 stock move
Reading the Chain
Finding ATM Options
The ATM strike is highlighted (often yellow). It's the strike closest to current stock price.
ITM vs OTM
Calls: Above ATM = OTM, Below ATM = ITM
Puts: Above ATM = ITM, Below ATM = OTM
What to Look For
- Tight bid-ask spreads (liquid options)
- High volume and open interest
- IV compared to other strikes/expirations
- Delta for position sizing
Key Takeaways
- Calls left, puts right, strikes in middle
- Bid = sell price, Ask = buy price
- Check volume and OI for liquidity
- ATM row is highlighted
Related Options Strategies
Bid-Ask Spread
Understanding price spreads.
Open Interest
Reading OI and volume.
Understanding related strategies helps you choose the best approach for your market outlook and risk tolerance. Each strategy has unique characteristics that make it suitable for different market conditions.
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