1. Underlying Asset
The underlying asset is the security on which the option contract is based. This could be an equity stock (like Reliance or TCS), an index (such as NIFTY or BANKNIFTY), a commodity, or a currency. All option prices in the option chain are derived from the movement of this underlying asset.
2. Expiry Date
The expiry date is the last date on which an option contract remains valid. After this date, the option either expires worthless or is settled (cash or physical settlement, depending on the contract). Option chains usually show multiple expiries—weekly, monthly, and sometimes quarterly—allowing traders to choose contracts based on their time horizon.
3. Strike Price
The strike price is the predetermined price at which the underlying asset can be bought (in the case of a Call option) or sold (in the case of a Put option). Strike prices are arranged vertically in the option chain, with Calls on one side and Puts on the other. The choice of strike price reflects the trader’s market view and risk appetite.
4. Call Option (CE)
A Call option gives the buyer the right, but not the obligation, to buy the underlying asset at the strike price before or on the expiry date. In the option chain, Call options are typically displayed on the left side. Rising Call premiums often indicate bullish sentiment, while heavy Call writing may signal resistance levels.
5. Put Option (PE)
A Put option gives the buyer the right, but not the obligation, to sell the underlying asset at the strike price before or on expiry. Put options are shown on the right side of the option chain. Increasing Put premiums usually reflect bearish sentiment or demand for downside protection.
6. Option Premium (Last Traded Price – LTP)
The option premium is the price paid by the option buyer to the seller (writer). In the option chain, this is shown as the Last Traded Price (LTP). The premium consists of intrinsic value and time value and fluctuates based on factors like underlying price, volatility, time to expiry, and interest rates.
7. Intrinsic Value
Intrinsic value is the real, in-the-money value of an option.
For a Call option: Intrinsic Value = Underlying Price − Strike Price
For a Put option: Intrinsic Value = Strike Price − Underlying Price
If this value is negative, intrinsic value is considered zero.
8. Time Value
Time value is the portion of the option premium beyond intrinsic value. It represents the possibility that the option may gain value before expiry. Time value decreases as expiry approaches, a phenomenon known as time decay or theta decay.
9. Open Interest (OI)
Open Interest refers to the total number of outstanding option contracts that have not been settled or closed. High OI indicates strong participation and liquidity at that strike price. Traders analyze changes in OI to understand whether new positions are being created or old ones are being unwound.
10. Change in Open Interest (ΔOI)
Change in Open Interest shows the increase or decrease in OI compared to the previous trading session.
Rising OI with rising price suggests strong trend continuation.
Rising OI with falling price indicates bearish buildup.
Falling OI suggests position unwinding.
11. Volume
Volume represents the number of option contracts traded during a particular trading session. High volume signals active trading interest and often precedes strong price movements.
12. Implied Volatility (IV)
Implied Volatility reflects the market’s expectation of future price fluctuations in the underlying asset. Higher IV means higher option premiums, while lower IV results in cheaper options. Traders closely track IV to decide whether options are expensive or cheap.
13. Bid Price and Ask Price
Bid Price: The highest price a buyer is willing to pay for an option.
Ask Price: The lowest price a seller is willing to accept.
The difference between them is called the bid-ask spread, which indicates liquidity.
14. At-the-Money (ATM), In-the-Money (ITM), Out-of-the-Money (OTM)
ATM: Strike price closest to the current underlying price.
ITM: Options with intrinsic value.
OTM: Options with no intrinsic value.
These classifications help traders select appropriate strikes.
15. Greeks in Option Chain
Some option chains also display Option Greeks, which measure sensitivity:
Delta: Sensitivity to underlying price changes
Gamma: Rate of change of Delta
Theta: Time decay
Vega: Sensitivity to volatility
Rho: Sensitivity to interest rates
Conclusion
An option chain is far more than a list of prices—it is a powerful analytical tool that reveals market psychology, support and resistance levels, volatility expectations, and trading opportunities. By understanding option chain terms such as strike price, open interest, implied volatility, and option Greeks, traders can make informed decisions, manage risk effectively, and build well-structured option strategies. Mastery of option chain terminology is a foundational step toward successful options trading.
The underlying asset is the security on which the option contract is based. This could be an equity stock (like Reliance or TCS), an index (such as NIFTY or BANKNIFTY), a commodity, or a currency. All option prices in the option chain are derived from the movement of this underlying asset.
2. Expiry Date
The expiry date is the last date on which an option contract remains valid. After this date, the option either expires worthless or is settled (cash or physical settlement, depending on the contract). Option chains usually show multiple expiries—weekly, monthly, and sometimes quarterly—allowing traders to choose contracts based on their time horizon.
3. Strike Price
The strike price is the predetermined price at which the underlying asset can be bought (in the case of a Call option) or sold (in the case of a Put option). Strike prices are arranged vertically in the option chain, with Calls on one side and Puts on the other. The choice of strike price reflects the trader’s market view and risk appetite.
4. Call Option (CE)
A Call option gives the buyer the right, but not the obligation, to buy the underlying asset at the strike price before or on the expiry date. In the option chain, Call options are typically displayed on the left side. Rising Call premiums often indicate bullish sentiment, while heavy Call writing may signal resistance levels.
5. Put Option (PE)
A Put option gives the buyer the right, but not the obligation, to sell the underlying asset at the strike price before or on expiry. Put options are shown on the right side of the option chain. Increasing Put premiums usually reflect bearish sentiment or demand for downside protection.
6. Option Premium (Last Traded Price – LTP)
The option premium is the price paid by the option buyer to the seller (writer). In the option chain, this is shown as the Last Traded Price (LTP). The premium consists of intrinsic value and time value and fluctuates based on factors like underlying price, volatility, time to expiry, and interest rates.
7. Intrinsic Value
Intrinsic value is the real, in-the-money value of an option.
For a Call option: Intrinsic Value = Underlying Price − Strike Price
For a Put option: Intrinsic Value = Strike Price − Underlying Price
If this value is negative, intrinsic value is considered zero.
8. Time Value
Time value is the portion of the option premium beyond intrinsic value. It represents the possibility that the option may gain value before expiry. Time value decreases as expiry approaches, a phenomenon known as time decay or theta decay.
9. Open Interest (OI)
Open Interest refers to the total number of outstanding option contracts that have not been settled or closed. High OI indicates strong participation and liquidity at that strike price. Traders analyze changes in OI to understand whether new positions are being created or old ones are being unwound.
10. Change in Open Interest (ΔOI)
Change in Open Interest shows the increase or decrease in OI compared to the previous trading session.
Rising OI with rising price suggests strong trend continuation.
Rising OI with falling price indicates bearish buildup.
Falling OI suggests position unwinding.
11. Volume
Volume represents the number of option contracts traded during a particular trading session. High volume signals active trading interest and often precedes strong price movements.
12. Implied Volatility (IV)
Implied Volatility reflects the market’s expectation of future price fluctuations in the underlying asset. Higher IV means higher option premiums, while lower IV results in cheaper options. Traders closely track IV to decide whether options are expensive or cheap.
13. Bid Price and Ask Price
Bid Price: The highest price a buyer is willing to pay for an option.
Ask Price: The lowest price a seller is willing to accept.
The difference between them is called the bid-ask spread, which indicates liquidity.
14. At-the-Money (ATM), In-the-Money (ITM), Out-of-the-Money (OTM)
ATM: Strike price closest to the current underlying price.
ITM: Options with intrinsic value.
OTM: Options with no intrinsic value.
These classifications help traders select appropriate strikes.
15. Greeks in Option Chain
Some option chains also display Option Greeks, which measure sensitivity:
Delta: Sensitivity to underlying price changes
Gamma: Rate of change of Delta
Theta: Time decay
Vega: Sensitivity to volatility
Rho: Sensitivity to interest rates
Conclusion
An option chain is far more than a list of prices—it is a powerful analytical tool that reveals market psychology, support and resistance levels, volatility expectations, and trading opportunities. By understanding option chain terms such as strike price, open interest, implied volatility, and option Greeks, traders can make informed decisions, manage risk effectively, and build well-structured option strategies. Mastery of option chain terminology is a foundational step toward successful options trading.
Publications connexes
Clause de non-responsabilité
Les informations et publications ne sont pas destinées à être, et ne constituent pas, des conseils ou recommandations financiers, d'investissement, de trading ou autres fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.
Publications connexes
Clause de non-responsabilité
Les informations et publications ne sont pas destinées à être, et ne constituent pas, des conseils ou recommandations financiers, d'investissement, de trading ou autres fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.