How to Read an Options Chain
The options chain contains all the information you need for smart trading decisions. Learn to understand every column.
Example Options Chain
Every Column Explained
Understand what each number means and how to use it for better decisions.
Strike
The exercise price. The price at which you can buy (call) or sell (put) the stock.
Strikes near current price (ATM) have highest liquidity.
Bid
The highest price someone is willing to PAY. You sell at the bid.
When selling, this is your actual proceeds.
Ask
The lowest price someone is willing to SELL. You buy at the ask.
When buying, this is your actual price.
Bid-Ask Spread
The difference between bid and ask. Tighter spread = better liquidity.
Spread > €0.30 = low liquidity. Be careful when trading!
Last
The last traded price. Can be stale with low volume.
Use Bid/Ask for current prices, not Last.
Volume
Number of contracts traded today. Shows current activity.
High volume = good liquidity for this strike today.
Open Interest (OI)
Number of open contracts. Shows how many positions exist.
High OI = established liquidity. More important than volume!
IV (Implizite Volatilität)
Market-expected volatility. High IV = expensive options.
Compare IV to historical volatility for trading decisions.
Greeks in the Options Chain
Many platforms also display Greeks. Here is a quick overview.
Delta (Δ)
Option price change per €1 stock movement.
Gamma (Γ)
How fast Delta changes. Highest ATM.
Theta (Θ)
Daily time decay. Negative for long positions.
Vega (ν)
Price change per 1% IV change.
Understanding ITM, ATM, OTM
The strike relative to stock price determines an option's "moneyness".
Call
Strike < Stock Price
Put
Strike > Stock Price
Delta
Call: 0.50-1.00 | Put: -0.50 to -1.00
Has intrinsic value. More expensive but higher probability of profit.
Call
Strike ≈ Stock Price
Put
Strike ≈ Stock Price
Delta
Call: ~0.50 | Put: ~-0.50
Highest time value and Gamma. Best liquidity.
Call
Strike > Stock Price
Put
Strike < Stock Price
Delta
Call: 0.00-0.50 | Put: 0.00 to -0.50
Only time value. Cheaper but lower probability of profit.
Quick Reference: What Should I Check?
Check Before Buying
- ✓Bid-Ask Spread: < 10% of option price
- ✓Open Interest: > 100, better > 500
- ✓Volume: Traded today = active market
- ✓IV: Compare with 30-day average
Warning Signs
- ✗Spread > €0.50 for options under €5
- ✗Open Interest < 50 (hard to sell)
- ✗No volume today (inactive market)
- ✗IV > 100% without news (overpriced)
Frequently Asked Questions
Which strike should I choose?
It depends on your strategy: ATM for maximum leverage and liquidity. Slightly OTM for cheaper entries with good risk/reward. ITM for more conservative trades with higher probability of profit. Always look for Open Interest > 100 and tight spreads.
What does a wide bid-ask spread mean?
A wide spread (> €0.30 or > 10% of option price) means low liquidity. You lose money immediately on entry and exit. Avoid such options or use limit orders at mid-price.
How do I use Open Interest for my decision?
OI > 1000: Very good liquidity. OI 100-1000: Acceptable. OI < 100: Caution, hard to trade. High OI at certain strikes can also indicate institutional activity and act as support/resistance.
Which columns are most important?
For beginners: 1) Strike (choose position), 2) Bid/Ask (real price), 3) Open Interest (liquidity). For advanced traders add: Delta (directional risk), IV (over/undervaluation), Theta (time decay).
What do the colored rows mean?
Most platforms highlight ITM options with color (often yellow or gray). The current stock price is usually marked by a line or highlight. ATM options are directly above/below this line.
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