How to Read an Option Chain, Column by Column

The Chain Is a Ladder, Not a Table

An option chain is one row per strike price. Each row carries two contracts — a call and a put, same expiry, both struck at the price in the middle column. Sort the rows by strike and you have a ladder: every rung a level the market quotes contracts at, with spot somewhere in the middle.

Calls are conventionally printed on the left, puts on the right, with the strike column between them. That layout is not decoration. A call is in the money when its strike sits below spot, and a put is in the money when its strike sits above spot, so the in-the-money half of the board forms a staircase that breaks exactly where spot is. Sahi tints those cells, which is why you can find the money on an unfamiliar chain without reading a single number.

Notice what the shading does. On the call side it fills the rows above the spot line; on the put side, the rows below it. The two shaded blocks meet at the money and point in opposite directions — that is the staircase, and it is the fastest orientation you have on a chain you have never seen before. Notice too that the call premium falls as you read down the strike column while the put premium rises: the same movement that puts one side in the money takes the other out of it.

Two things fix a chain: the underlying and the expiry. Change the expiry and every figure changes with it — the same 24,850 strike carries a different premium, a different open interest and a different implied volatility on each date listed. Read across a row and you compare two contracts on the same level; read down a column and you compare one measurement across every level.

The Strike Column and Moneyness

Strikes are not chosen by traders. The exchange lists them on a fixed grid — 50 points apart on NIFTY, wider on BANKNIFTY — and extends it outward as spot travels. It is the one column in the chain that does not move during the session, and everything else is read against it.

Moneyness is where a strike sits relative to spot. A call is in the money when spot is above its strike and out of the money when spot is below it; a put is the mirror. In-the-money contracts carry intrinsic value, the amount they are already worth. Out-of-the-money contracts carry none, so all of their premium is time value — and time value can go to zero.

With NIFTY at 24,860 the 24,800 call is 60 points in the money. If it trades at 132, exactly 60 is intrinsic and the other 72 is what the market charges for the movement and time left. The 24,800 put at that instant has no intrinsic value at all — whatever it trades at is entirely time value.

The at-the-money row is picked by proximity, not by an exact match. Spot rarely lands on a listed strike, so ATM is whichever is nearest: with NIFTY at 24,860 on a 50-point grid that is 24,850, ten points away, not 24,900 which is forty. Sahi marks that row so it stays right as spot drifts.

LTP, Bid, Ask and the Spread

LTP is the last traded price — the premium at which the most recent transaction in that contract happened. It is a fact about the past. On a heavily traded at-the-money strike that past is a fraction of a second ago and LTP is as good as live; on a strike ten rungs out it can be twenty minutes old.

Bid is the highest price anyone is currently willing to pay for the contract. Ask, or offer, is the lowest price anyone will sell it at. Those two are the live market: buy at market and you pay the ask, sell at market and you receive the bid. The gap between them is the spread, paid on the way in and again on the way out.

On the ATM strike of a liquid index the spread barely registers: a NIFTY 24,850 call quoted 118.20 against 118.75 has a spread of 0.55, under half a percent of the premium. The 25,800 call quoted 2.10 against 3.05 has a spread of 0.95 on a mid of 2.58 — about thirty-seven percent. The contract that looked cheap in rupees is the expensive one to trade.

So a wide spread at a far strike matters more than the premium does. You start down by it, the LTP on that row may be stale enough that on-screen profit is provisional until you fill, and the width itself says very few participants want either side — exactly the contract you do not want to be forced out of quickly.

On a thin strike the mid price is a fairer reference than LTP. Spreads widen where you would expect: far strikes, single stocks rather than indices, and the outer rungs as expiry nears.

The Open Interest and Volume Columns

Two columns sit on each side of the chain and carry more than the rest combined. Open interest is the number of contracts at that strike still open — taken and not yet closed out or settled. Volume is the number of contracts traded during the session, and it resets to zero the next morning.

The distinction is the whole point. Volume is a flow; open interest is a level. One contract changing hands forty times today adds forty to volume and nothing to open interest. Beside them the chain carries change in open interest — the part of the level built or unwound today.

Read the two together and a third thing appears that neither shows alone. Heavy volume with open interest climbing means fresh positions are being created. Heavy volume with open interest falling means existing ones are being closed. Identical volume, opposite meaning — which is why the change column matters more than the level on any given afternoon.

Read down those columns and the heaviest strikes stand out at once. Large call open interest above spot and large put open interest below it are commonly treated as reference levels. Treat that as a crowding observation rather than a rule.

This guide stops there deliberately. Absolute OI, change in OI, OI change as a percentage, the volume-to-OI ratio and the four build-up states that come from pairing price direction with OI direction are covered properly in the open interest guide, which is the one to read next. The summaries built on these same two columns have guides of their own: the put-call ratio compresses the book into one number, and max pain reads the shape of the distribution across every strike.

Implied Volatility, Strike by Strike

Implied volatility is the annualised movement the market is pricing into a contract, recovered by running an option pricing model backwards from the premium it actually trades at. Spot, strike, time remaining and rates are all known. IV is whatever number makes the model agree with the market.

The important part is per contract. The chain does not publish one IV for NIFTY; it publishes a column on each side, with a different figure in every row. Read it top to bottom and it is not a flat line.

That is the usual shape with NIFTY near 24,860: lowest at the money, higher in both tails, higher on the downside tail than the upside one. The tilt has a name — skew — and index options carry it almost all the time. It is commonly attributed to steady demand for downside protection.

Two consequences are worth carrying. Comparing one strike's IV against another's describes the shape of that curve, not whether either is expensive — a contract is dear or cheap against its own recent range. And IV expands ahead of a scheduled event and typically contracts once it has passed, which is how a premium falls on the day you were right about direction. Calls and puts at the same strike can print different IVs too; the FAQ below covers why.

The Greeks Columns

The four Greek columns answer four questions about the same premium: what happens if spot moves, how fast that sensitivity itself changes, what a day of time costs, and what a shift in implied volatility does. Each is a rate of change computed from the live quote, so none is a constant: a delta of 0.52 now is not one an hour from now.

Two of those shapes are worth holding on to. Gamma and vega both peak at the money, which is why at-the-money contracts are the most reactive on the board to both movement and a change in pricing. Theta is the odd one out: it is read against the calendar rather than the strike ladder, and it is the only one working against the holder every single day whether spot moves or not.

Signs are conventions worth checking once: put delta is shown negative because a put gains as the underlying falls, and theta is usually shown negative, reading from the buyer's side.

The Order to Read a Chain In

A NIFTY chain lists dozens of strikes across two sides, each with a dozen columns — well over a thousand numbers, and taken whole they say nothing. Taken in sequence it is a thirty-second job. Most people start at the premium column, which means a contract has been chosen before anything is known about positioning. Start at spot instead and every later number has something to be measured against.

Expect the passes to disagree sometimes. Heavy put open interest below spot alongside a premium structure pricing a sharp fall is a conflict, not a signal, and the useful response is usually to wait rather than average the two into a view. Watching how price behaves around the levels the chain implies — the walls on open interest and the magnet on max pain — shows which read the market is respecting.

One thing belongs in front of all of it. A chain describes how the option market is positioned right now — a record of what has already been done, not a statement about what happens next. Every level it implies is an observation about crowding, and crowded levels break.