The shape of the chain
An option chain lists every strike price available for one underlying and one expiry. Calls sit on one side, puts on the other, and the strikes run down the middle. The row nearest the current price of the underlying is the at-the-money strike; everything above and below it is out-of-the-money on one side and in-the-money on the other.
Change the expiry and the whole chain reprices. The same strike is worth more with more time left, because there is more time for the underlying to reach it.
What each column is telling you
Premium (LTP)
What one unit of the contract last traded at. Multiply by the lot size to get what the position actually costs or credits.
Bid and ask
The best price someone will buy at and the best price someone will sell at. The gap between them is the spread, and it is a real cost: a wide spread on a far out-of-the-money strike can cost more than the move you are trading for.
Open interest
How many contracts are currently outstanding at that strike. Large open interest marks strikes the market has taken positions at; it is a measure of participation, not a prediction.
Implied volatility
The volatility the current premium implies. High implied volatility means options are expensive relative to their own history — good for writers, punishing for buyers if it falls back.
Reading the chain before you trade
- Find the at-the-money strike first; everything else is relative to it.
- Check the spread on the strike you want, not just the premium. Illiquid strikes look cheap and exit badly.
- Compare the same strike across two expiries to see what you are paying for time.
- Note the implied volatility before an event and again after it. The drop after the news is often larger than the move in the underlying.
Practise on a live chain
Reading about a chain and using one are different skills. Trade Monky shows the live chain for NIFTY, BANKNIFTY and other indices with premiums, open interest, implied volatility and bid-ask spreads, and lets you place virtual orders straight from it. Pick a strike, place a paper trade, and check the chain again an hour later to see what moved and why.
Frequently asked questions
Is the option chain free to use?
Yes. The chain and paper trading from it are free.
Does the chain update live?
Yes, from a live market data feed during market hours.
Do I need to understand Greeks to start?
No. Start with premium, spread and expiry. Implied volatility is the next concept worth learning; the rest can wait until you have traded a few dozen times.