An option chain lists every strike for one expiry, with calls on one side and puts on the other. It looks crowded at first, but you only need a handful of columns.
The columns that matter
- Strike: the middle column. Strikes near the current price are at the money.
- LTP (last traded price): the latest premium. Check the time of the last trade too.
- Bid and ask: what buyers will pay and sellers will accept. A wide gap means poor liquidity.
- Volume: contracts traded today.
- Open interest (OI): contracts still open. High OI usually means better liquidity.
- IV: implied volatility for that strike.
A simple routine
Start at the ATM strike. Check the bid-ask spread and open interest there and a few strikes either side. Compare IV with recent levels. Only then look at the premium and decide whether the trade makes sense.
A word on open interest
Some traders read large OI at a strike as support or resistance. It can be a useful hint, but it is not a reliable signal on its own. Treat it as one input, not a prediction.
This article is for education only and is not financial advice. Options involve risk and are not suitable for every investor.