Updated May 14, What is an Option Chain? An option chain, also known as an option matrix, is a listing of all available option contracts, both puts and calls, for a given security. Understanding Option Chain Option chains are probably the most natural form of presenting information for most retail investors. Depending on the presentation of the data, bid-ask quotes, or mid quotes, are also displayable within an option chain.
The majority of online brokers and stock trading platforms display option quotes in the form of an option chain using real-time or delayed data. The chain display allows quick scanning of activity, open interest, and price changes.
Traders can hone in on the specific options required to meet a particular options strategy. Key Takeaways An option chain, also known as an option matrix, is a listing of all available option contracts, both puts and calls, for a given security. The option chain matrix is most useful for the next trading day.
Traders typically focus on 'last price', 'net change', 'bid' and 'ask' columns to assess current market conditions. Decoding the Option Chain Matrix The terms in an options matrix are relatively self-explanatory.
A skilled user can quickly decipher the market regarding price movements and where high and low levels of liquidity occur. There are four columns of information that traders focus on to assess current market conditions.
The last price column displays the latest trade price captured and reported.
Trading volumeor the number of contracts that change hands in a given day, indicates how much liquidity there might be for any given option. The real level of open interest varies intraday. Market makers report the information shown in the option chain only at the end of each trading day.