Reading an option chain, column by column

6 min read•Updated on 6 Sep 2026•by GeniAnalysis

What every column in the option chain measures, and the order to read them in.

Most people open an option chain, look at the price, and close it again.

That is a reasonable reaction. The screen is a wall of numbers, mirrored down the middle, updating every few seconds. Nothing on it announces which figure matters. So the eye goes to the one number that looks familiar, the price, and the rest of the screen goes unread.

The chain is readable. It just has an order to it, and price is near the end of that order rather than the start.

The layout, and why it is mirrored

Strike prices run down the centre of the screen. Calls sit on the left, puts on the right, and each row shows both contracts at that strike.

The mirroring is not decoration. Every strike has a call and a put, and the two are linked. Reading them side by side is how you see that a strike carrying heavy call open interest and almost no put open interest is a very different situation from one where both sides are crowded.

The chain typically opens centred on the current price, with in-the-money strikes above and out-of-the-money strikes below on one side, and the reverse on the other. Which brings us to three terms worth clearing up before anything else.

In the money, at the money, out of the money

At the money (ATM) is the strike closest to where the underlying is trading right now.

In the money (ITM) means the option has intrinsic value today. A call is in the money when the strike sits below the current price. A put is in the money when the strike sits above it.

Out of the money (OTM) is the reverse. No intrinsic value. The entire premium is time and volatility.

These labels shift as price moves. A strike that was at the money this morning is in or out of the money by the afternoon. That is worth remembering when you look at a chain and see heavy positioning at a strike that is no longer where the action is.

The columns, in the order that matters

Here is the sequence we would argue for. It is close to the reverse of how most people actually read the screen.

1. Change in open interest

Start here.

Open interest is the number of contracts still outstanding. Change in OI is how much that number moved today. It is the single most informative column on the chain, because it tells you what happened during the session rather than what has accumulated over weeks.

A strike with 40 lakh contracts of open interest and no change today is old positioning. A strike with 8 lakh contracts that added 6 lakh of them this morning is where people are acting now. The first is history. The second is news.

Read the change column across the strikes and you get a map of where the session's positioning went.

2. Open interest

Now the absolute number, for context.

Open interest counts contracts that exist, not contracts that traded. If you buy from someone opening a new short, open interest rises. If you buy from someone closing an existing long, it does not move at all. The contract simply changed hands.

That distinction is why open interest and volume answer different questions, and why reading one as a substitute for the other produces confusion.

Large open interest at a strike tells you a lot of positions are sitting there. It does not tell you which side is dominant, and it does not tell you the positions are recent.

3. Volume

Today's activity. Contracts traded, regardless of whether they opened or closed a position.

Volume is the sanity check on everything above it. A strike showing a big change in open interest on thin volume is one or two large participants. The same change on heavy volume is many. Both are real, but the first is far easier to reverse than the second.

Volume also tells you whether you can actually get in and out. A strike with almost no volume is a strike where the quoted price is theoretical.

4. Implied volatility

IV is what the market is currently paying for uncertainty at that strike.

It is not a forecast and it is not a direction. It is a price. When IV is high, options at that strike are expensive relative to their history. When it is low, they are cheap. That is the whole of what the number says.

IV is rarely flat across strikes. Out-of-the-money puts usually carry higher IV than equivalent calls, because demand for downside protection is persistent. That shape is normal. What is worth noticing is when it changes.

The practical use is comparison. IV at this strike against IV at neighbouring strikes, and against where this instrument's IV usually sits. An option can be a correct read on direction and still lose money if you bought it when IV was elevated and it collapsed afterwards.

5. Last traded price, bid and ask

Last, not first.

LTP is where the option last changed hands, which may have been some time ago on an illiquid strike. The bid and ask are what you can actually transact at right now, and the gap between them is a cost you pay on entry and again on exit.

A wide spread on an otherwise interesting strike is a real problem, not a detail. On thinly traded strikes the spread can be a meaningful fraction of the premium.

Reading concentration

Once the columns make sense individually, the next thing to look for is shape.

Open interest is almost never spread evenly. It clusters. Certain strikes carry far more than their neighbours, usually round numbers, and those clusters describe where positioning has gathered.

Heavy call open interest at strikes above the current price means a lot of calls have been written up there. Heavy put open interest below means the same on the other side. People often label these support and resistance. The label oversimplifies, because open interest shows where positions are, not where price has to go, and these clusters break routinely.

What the clusters genuinely describe is where a large number of participants have taken a position, and therefore where a move would create pressure. That is useful context. It is not a level to act on.

What the chain will not tell you

Direction.

The chain describes positioning. It does not reveal intent, and it cannot distinguish between a directional bet and a hedge. A large new short position at a strike looks identical whether it was opened by someone expecting a fall or someone protecting a holding they intend to keep. Both create the same open interest.

Anyone reading conviction out of an option chain is filling in a blank that is not in the data.

The chain is a description of how the market is currently positioned. It is a good description, and it is more than a price chart gives you. It is still only that.

Reading it every day is the hard part

Working through one chain carefully takes a few minutes. That is fine when you are looking at one instrument.

The difficulty arrives when the question is comparative. Where did open interest build across the F&O universe today. Which strikes changed character. Whether the pattern in one name is unusual or is happening across its whole sector. Answering that by opening chains one at a time is not realistic on a daily basis.

That is a screening problem rather than a reading problem.

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