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How to read an option chain?

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HomeOption ChainHow to read an option chain?

An option chain provides a structured view of all available call and put options for a stock or index, along with key metrics that help traders analyse market sentiment, liquidity, and potential price movements. Here’s how to read and interpret an option chain effectively.

Understand the Layout

Web portal:

Mobile App:

An option chain is divided into two sections:

  • Call Options on the left
  • Put Options on the right

The middle column lists strike prices.

Key Components and What They Indicate

  • Strike Price: The price at which the option contract can be exercised.
  • Last Traded Price (LTP): The most recent price at which the option was bought or sold.
  • Open Interest (OI): The total number of open contracts. Higher OI indicates more liquidity and trader interest.
  • Change in OI: Shows new positions being added (rising OI) or old positions being closed (falling OI).
  • Bid Price & Ask Price: The highest price a buyer is willing to pay and the lowest price a seller is asking. A tighter spread indicates better liquidity.
  • Implied Volatility (IV): Higher IV means the market expects larger price swings, while lower IV suggests stability.
  • Put-Call Ratio (PCR): Helps gauge market sentiment. A PCR above 1 indicates more Put buying (bearish), while below 1 suggests more Call buying (bullish).

How to Use the Share India Option Chain for Trading Decisions

  • Identify support and resistance levels by analysing where OI is highest.
  • Observe IV spikes for potential high-volatility trading opportunities.
  • Track OI changes to see where new positions are being built.
  • Compare bid-ask spreads to ensure efficient trade execution.

For step-by-step instructions on navigating the option chain on the Share India platform, click here! 

With Share India’s real-time option chain, traders can easily track these metrics and make well-informed trading decisions.If you face any issues or need any support while using the platform, you can contact the Share India support team via email at support@shareindia.com or by phone at 1800 203 0303.