How to Read an Options Chain: Complete Beginner's Guide

The options chain is your window into the options market. It displays all available options for a stock, showing prices, volumes, and other critical data you need to make trading decisions. Learning to read an options chain is essential for any options trader. This guide walks you through every component.

What is an Options Chain?

An options chain (also called an option matrix or option table) is a listing of all available option contracts for a particular stock or ETF. It shows both call and put options across different strike prices and expiration dates, along with pricing and other data for each contract.

Basic Layout of an Options Chain

Most options chains are organized with:

• Calls on the left side
• Strike prices in the middle
• Puts on the right side
• Expiration dates selectable at the top

The current stock price is usually highlighted, with in-the-money options shaded differently from out-of-the-money options.

Understanding Each Column

Let us go through each column you will see in an options chain:

Strike Price

The strike price is the price at which you can buy (call) or sell (put) the underlying stock. Strike prices are listed in the center column and typically come in standard increments ($1, $2.50, $5, or $10 depending on the stock price).

• In-the-money (ITM): Calls with strikes below stock price; puts with strikes above
• At-the-money (ATM): Strikes near the current stock price
• Out-of-the-money (OTM): Calls with strikes above stock price; puts with strikes below

Bid Price

The bid is the highest price a buyer is currently willing to pay for the option. If you sell an option, you will receive approximately the bid price.

Ask Price

The ask (or offer) is the lowest price a seller is willing to accept. If you buy an option, you will pay approximately the ask price.

Last Price

The last traded price for that option. Note that this may be stale if the option has not traded recently.

Change

The price change from the previous day's closing price, usually shown in dollars and sometimes also as a percentage.

Volume

The number of contracts traded today. High volume indicates active trading interest.

Open Interest

The total number of outstanding contracts that have not been closed or exercised. This indicates overall market interest in that strike.

Advanced Columns You May See

Many platforms show additional data:

Implied Volatility (IV)

The market's expectation of how much the stock will move. Higher IV means more expensive options. This is crucial for understanding if options are cheap or expensive.

Delta

How much the option price changes for a $1 move in the stock. Also approximates probability of finishing in-the-money.

• ATM calls have delta around 0.50
• Deep ITM calls approach 1.00
• Far OTM calls approach 0.00

Gamma

How fast delta changes. High gamma means the option is very sensitive to stock price movement.

Theta

Time decay - how much value the option loses each day. Shown as a negative number for long positions.

Vega

Sensitivity to changes in implied volatility. Shows how much the option price changes for a 1% change in IV.

Rho

Sensitivity to interest rate changes. Less important for most retail traders.

Selecting Expiration Dates

At the top of the options chain, you will see available expiration dates:

• Weekly options: Expire every Friday (on popular stocks)
• Monthly options: Expire the third Friday of each month
• Quarterly options: Expire at the end of each quarter
• LEAPS: Long-term options expiring a year or more out

Select different expirations to see how prices and Greeks change with time.

Identifying In-the-Money vs Out-of-the-Money

Most platforms shade ITM and OTM options differently:

• ITM options: Have intrinsic value (would have value if exercised today)
• ATM options: Strike is at or very near current stock price
• OTM options: Have no intrinsic value (only time value)

Using the Options Chain for Analysis

Here is how to use the chain to find trading opportunities:

1. Check Liquidity First

Look at volume and open interest. Focus on options with high numbers for better execution.

2. Evaluate the Spread

Calculate bid-ask spread as a percentage. Avoid options with spreads over 10%.

3. Compare IV Across Strikes

Look for unusual IV patterns that might indicate opportunities.

4. Analyze the Greeks

Use delta to gauge directional exposure, theta to understand time decay, and vega to assess volatility risk.

Tips for Using Options Chains Effectively

• Customize your display: Add or remove columns based on what you need
• Use filters: Filter by strike range, expiration, or other criteria
• Watch multiple expirations: Compare pricing across dates
• Refresh regularly: Prices change constantly during market hours
• Save common views: Set up templates for your frequent trades

Common Options Chain Terminology

• Mark: The midpoint between bid and ask
• Spread: Difference between bid and ask
• Multiplier: Usually 100 (one contract = 100 shares)
• % OTM: How far the strike is from current price
• Probability ITM: Estimated chance of expiring in-the-money

Mobile vs Desktop Options Chains

Mobile apps typically show simplified chains due to screen size:

• Fewer columns visible at once
• May need to scroll or tap for details
• Greeks might be hidden behind menus

For serious analysis, use a desktop platform with full chain visibility.

Summary

The options chain is your primary tool for finding and analyzing options trades. Understanding each column - from basic bid/ask prices to advanced Greeks - helps you make informed decisions. Focus on liquidity first, evaluate pricing and spreads, then dig into the Greeks for deeper analysis. With practice, reading options chains becomes second nature.

Expand your options knowledge with our Greeks explained guide or learn about options symbols and how they work.