Reading an Option Chain

A T-shaped table

An option chain lines up every contract with the same expiry: the middle column is the strike price, calls are on the left and puts on the right. Cells shaded green are in-the-money contracts.

Two prices per cell: Bid and Ask

When buying you pay the higher Ask; when selling you only get the lower Bid. The difference is the spread, and multiplied by 100 it's the real cost per contract.

Popular contracts are easier to trade

Open interest shows how many contracts are still open. Contracts at round-number strikes and near the money are usually the most active, with the narrowest spreads; little-traded contracts may show a quote that nobody takes.

Key takeaways

• The option chain is organized by expiration date, with strikes in the middle, calls on the left and puts on the right.
• Buying fills at the higher Ask and selling at the lower Bid; the difference between them is the spread.
• Quotes are per share, so 1 contract costs quote × 100.
• Strikes with more open interest are more active, usually with tighter spreads and easier fills.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

1. Stock at $100, 30 days to expiry: which rows on the call side (left) are shaded green? Why are different rows shaded green on the put side (right)?
2. Click the Call on the left of the 105 row: buying fills at the Ask of $1.75. How much does 1 contract cost?
3. Switch to “Sell (get the Bid)”: the same contract only gets $1.60. How much do you lose instantly by buying and selling (see “Spread cost”)?
4. Switch the expiry to 7 days, then to 90 days: what does the ask on the same 105 call become each time? Then drag the stock price to $107: how does the green shading move?

Quiz and explanations

1. A call is quoted "Bid $2.10 / Ask $2.30". If you buy 1 contract right now, roughly how much does it cost?

Answer: $230.Buying means accepting the $2.30 ask, × 100 = $230.

2. The stock is $100. Which cell in the option chain is in the money?

Answer: The $95-strike call.A call is in the money when the strike is below the stock price: you can buy a $100 stock for $95.

3. A contract is quoted $1.60 / $1.75. If you buy and immediately sell (with no price change), how much do you lose per contract?

Answer: $15.You buy at $1.75 and sell at $1.60, losing $0.15 per share, × 100 = $15. That's the spread cost.

Terms in this lesson

• Ask: The price sellers are asking for. When you buy, you trade at the Ask.
• Bid: The price buyers are willing to pay. When you sell, you trade at the Bid.
• intrinsic value (Intrinsic Value): What you'd get by exercising right now; for a call, max(stock price − strike, 0).
• in the money (ITM) (ITM): An option with intrinsic value, such as a call whose strike is below the stock price.
• open interest (Open Interest): The total number of contracts not yet closed or expired; the bigger the number, the more active and easier to trade that strike is.
• option chain (Option Chain): A table of every option on one underlying and expiry: strikes in the middle, calls on one side, puts on the other, with a bid and ask in each cell.
• out of the money (OTM) (OTM): An option with no intrinsic value, such as a call whose strike is above the stock price.
• spread (Spread): The gap between the Ask and the Bid, a hidden cost on every trade.
• strike price (Strike): The price written into an option contract at which you can buy or sell.
• time value (Time Value): The part of an option's price above its intrinsic value, reflecting the chance it gains value before expiry; it melts away over time.