What is an Option Chain?

An option chain is like a restaurant menu.

It tells you what is available and for what price. Like most menus, they generally look and feel the same. But, depending on which restaurant you dine at, certain things may look different, or be arranged differently. Sometimes you can only read a menu, but once you’re seated you can order food from your server. When you decide what you want to order, you can choose one item, or a combination of items to create the meal that works for your individual situation.

It depends. If you are on your broker’s trading platform you can potentially use the options chain to create an order (assuming you are approved to do so and have the necessary funds and account type).

However, if you are searching the Internet, there are some sites that provide an options chain to display information, but you would not be able to use it to trade options.

A good place to start is familiarizing yourself with the meanings of certain labels on columns you will see in an option chain:

• Symbol: Every option has a symbol, just like its underlying stock. This is called the options OPRA code. OPRA stands for the Options Price Reporting Authority. An options OPRA code can look a bit cryptic, but it essentially combines all of the pertinent information for the option into one long symbol for the option.
• Volume: Volume tells you how many contracts of a particular option were traded during the most recent trading session.
• Last price: The last price is the most recently posted trade on an option.
• Strike: Strike, or strike price, or exercise price, is the price the seller is obligated to buy (in the case of a put option) or sell (in the case of a call option) at anytime through an option’s expiration date.
• Put and call: When viewing an option chain, the prices of call options and put options will be listed separately. Traditionally, calls are listed on the left side of the option chain, and puts are on the right. But some brokers will display these separately, meaning a page for call options, and a separate page for put options.
• Closing price: The closing price is the final price at which any stock or option trades during regular hours on any day.
• Change: A change column will show you how much the last price, or the most recent price at which an option was last traded, varied from the previous day’s closing price. This can be displayed in dollar terms, referred to as the Change, or percentage terms, referred to as % Change.
• Bid and ask: These columns show the prices at which buyers and sellers are willing to trade. The bid price is the highest price someone is willing to pay for an option. The ask price is the lowest price someone is willing to sell an option for.
• Open interest: Open interest indicates the total number of contracts of a certain option that are currently open. These are the amount of contracts yet to be closed or exercised and settled into the underlying stock or instrument.

You may not see this on your option chain, but having knowledge about the concepts of call and put options being ‘in, at, or out of the money’ is crucial when you’re analyzing information on an option chain and making a decision about a potential trade. Learn more about what is meant by options being ‘in the money,’ ‘at the money,’ or ‘out of the money' here.

Yes! Options trading entails significant risk and is not for everyone. Certain complex options strategies carry additional risk. You can learn more about these risks by reviewing the options disclosure document titled Characteristics and Risks of Standardized Options, available here or through https://www.theocc.com. It’s important to consider your investment objectives and risks carefully before trading options. Supporting documentation for any claims, if applicable, will be furnished upon request.