How to Read an Option Chain
Learn how to evaluate options at a glance
Looking at an option chain can be daunting. Especially since it can feel like you are learning a new language with all the seemingly random numbers and words thrown at you, but once you get the basics the option chain can provide incredibly valuable information at a glance about where a stock’s price may be moving to in the future.
There are many different versions of option chains that provide a wide range of information. I chose a view from Robinhood that is a bit dated, but nonetheless, the layout is simple and it captures a lot of detail that we can cover.
Let’s expand on each of the key items above in more detail:
Stock Ticker
This is the shorthand symbol used to identify the stock when looking it up for research or purchase. For stocks the symbol is usually 1–4 letters long, although it can be longer.
Calls or Puts
As you can see in the visual above, the option chain is broken into two sections, calls and puts. Simply stated, a call option gives you the right (not the obligation) to purchase 100 shares of an asset at a specific price up to a specific date. On the flip side, a put option gives you the right (not the obligation) to sell 100 shares of the asset at a specific price up…
