How to read an options chain
An options chain is a table listing every available option for an underlying, organised by expiration date and strike price, with the current bid, ask, last price, volume, open interest and usually implied volatility and Greeks for each contract. Calls are typically shown on the left and puts on the right, with strikes running down the middle. Once you know what each column means, a chain is the fastest way to see what the market is pricing.
The layout
At the top of most chains is a row of expiration dates. Selecting one shows all strikes for that expiry. Short-dated expiries sit at the left of the row; longer-dated ones to the right. Many platforms also show the number of days to expiry next to each date.
The strike column runs down the centre, from low strikes at the top to high strikes at the bottom. On each row, the call for that strike is shown on one side and the put on the other. Strikes that are in the money are usually shaded: for calls, strikes below the current price; for puts, strikes above it. The current price is often marked by a line between the two nearest strikes.
Strike spacing varies. Liquid underlyings such as SPY list strikes one dollar apart, or closer near the money; many single stocks list strikes at wider intervals, with tighter spacing near the current price and wider spacing further out.
The price columns
The bid is the highest price a buyer is currently willing to pay; the ask is the lowest price a seller will accept. The difference is the spread. If a contract shows a bid of 2.40 and an ask of 2.50, you can sell immediately at 2.40 or buy immediately at 2.50. Prices are per share, so one contract at 2.50 costs 250 dollars.
The mark or mid is the midpoint between bid and ask, 2.45 in that example, and is often a reasonable reference for a fair price. The last price is the most recent trade, which can be stale in thinly traded contracts and may not reflect current bids and offers at all.
The width of the spread relative to the price tells you how costly it is to trade a contract. A ten-cent spread on a 2.45 option is about four percent of its value; a ten-cent spread on a 25-dollar option is negligible.
Volume, open interest and the statistics
Volume is the number of contracts traded today. Open interest is the number of contracts outstanding as of the previous close. High open interest generally means more participants and tighter spreads; volume above open interest suggests new positions are being opened today.
Implied volatility is the volatility the contract's price implies. Comparing it across strikes shows the skew; comparing it across expiries shows the term structure. Many chains also show delta, gamma, theta and vega, which describe how each contract's price responds to changes in the stock, time and volatility.
Delta is a useful quick guide when scanning a chain. It shows how much each contract behaves like the stock and roughly how likely it is to finish in the money. A 0.30 delta call is further out of the money than a 0.50 delta call, and cheaper, with a lower chance of paying off.
A quick example
Say a stock trades at 48.20 and you open the chain for the expiry nine days out. The 48 call shows a bid of 1.35 and an ask of 1.45, with a delta of 0.55; the 48 put shows 1.10 by 1.20, with a delta of minus 0.45. The straddle at the mids costs about 2.55, so the market is pricing a move of roughly 2.55 dollars, a little over 5 percent, by that expiry.
Scanning down, the 50 call has open interest of 12,000 while neighbouring strikes have a few hundred, and the 45 put has 9,000. Those two strikes are where positions, and the hedges attached to them, are concentrated for this expiry. Both are within the range the straddle is pricing, which makes them strikes worth knowing about rather than distant curiosities.
Reading a chain quickly
Start with the at-the-money straddle in the nearest expiry: the call and put at the strike closest to the price. Their combined price is roughly the move the market is pricing by that date. That one number frames everything else on the chain.
Then look at where the volume and open interest are concentrated. Heavy open interest at particular strikes shows where positions, and therefore hedges, are concentrated. Every ticker's page at flowmonkey.net/levels shows its call wall, put wall and max pain from the closing book, which are summaries of exactly that concentration.
Finally, check the spreads on the contracts you are interested in. A contract with a wide spread and little open interest can be expensive to enter and exit, whatever its theoretical value.
Common questions
Should I use the last price or the mid price?
The mid, between the bid and ask, is usually a better reference. The last price can be stale in contracts that have not traded recently.
Why are option prices quoted per share?
Convention. A standard equity option covers 100 shares, so the contract cost is the quoted price times 100.
What does the shaded area on an options chain mean?
Usually that those contracts are in the money: calls with strikes below the current price and puts with strikes above it.
An options chain is organised by expiry and strike, with calls on one side and puts on the other. Read the at-the-money straddle first for the priced move, then open interest for where positions sit, then the spread for what it costs to trade.
Keep reading
See it on a live board
FlowMonkey prices every level by whether your ticker can actually reach it today — measured on that symbol's own range, re-sorted as the session burns down.
See pricing