A Newbie's Guide to Reading an Options Chain

Learn about put options, how these financial derivatives work, and when put options are considered to be in the money related This ensures that there are enough people trading the option to make it worth your time. Find out four simple ways to profit from call and put options strategies. Along with your case study, you'll also get my daily emails where I share my favorite option trading strategies, examples of the trades I'm currently in, and ways to protect your investments in any market. The terms in an options matrix are relatively self-explanatory. Futures and options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.

Options Trading Center Enter up to 25 symbols to get the option chain for your favorite stock.

What is an 'Option Chain'

Trading volume , or 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. The option chain matrix is most useful for the next trading day. An out of the money option has no intrinsic value, but only possesses An underlying option security is the financial instrument stock, Options offer alternative strategies for investors to profit from trading underlying securities.

Learn about the four basic option strategies for beginners. Trading options is not easy and should only be done under the guidance of a professional. Learn how options are priced, what causes changes in the price, and pitfalls to avoid when trading options. Find out four simple ways to profit from call and put options strategies.

The last price is the most recent posted trade and the change column shows how much the last trade varied from the previous day's closing price. Think of options just like stocks as big online auctions. Buyers are only willing to pay so much, and the seller is only willing to accept so much. Negotiating happens at both ends until the bid and ask prices start coming closer together.

Finally, either the buyer will take the offered price or the seller will accept the buyer's bid and a transaction will occur. With some options that do not trade very often, you may find the bid and ask prices very far apart.

Buying an option like this can be a big risk, especially if you are a new options trader. How to Calculate the Bid-Ask Spread. The volume column shows how many options traded today, while the open Interest column shows how many options are outstanding. In the money options have already crossed over the current market price and have instant underlying value. You could buy it and immediately sell it for a profit. That guaranteed profit is already built into the price of the option and in the money options are always far more expensive than out of the money ones.

If an option is out of the money, it means the strike price hasn't yet crossed the market price. You are wagering the stock will go up in price for a call or down in price for a put before the option expires.

If the market price doesn't move in the direction you wanted, the option expires worthless. Getting Acquainted With Options Trading. No thanks, I prefer not making money.

How to Read a Stock Option Chain...

Option Chain for Apple Inc. (AAPL) Calls "Calls" is an option that gives the holder the right to buy the underlying asset. Last "Last Sale" is the most recent trade. Calls Options and Put Options Each stock option chain will list out all the call options and all the put options for the particular stock. Depending on which option chain you are looking at, the call options may be listed above the put options or sometimes the calls and puts are listed side-by-side. An option chain is a matrix listing for a single underlying asset showing all puts, calls, strike prices, and pricing information for a given maturity period. 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.