Short answer: An option chain is a complete listing of all option contracts, both calls (the right to buy) and puts (the right to sell), for a single underlying security, such as a stock. Traders use it to see contracts across different expiry dates and strike prices, and how many remain open at each level.
Last reviewed: 3 November 2026
At a glance
| Term | What it means |
|---|---|
| Call option | The right, but not the obligation, to buy the underlying at the strike price within a set period |
| Put option | The right, but not the obligation, to sell the underlying at the strike price within a set period |
| Strike price | The fixed price at which an option can be exercised; it does not change as the underlying’s price moves |
| At the money | The strike price equals the current market price of the underlying |
| Open interest | The number of outstanding option contracts not yet closed, exercised, or settled |
| Bid and ask | The bid is the highest price a buyer will pay; the ask is the lowest price a seller will accept |
What does an option chain show?
A chain is usually laid out as a table. Each row is a strike price, and the columns on either side show the call and put data for that strike. Because the chain covers multiple expiration dates, you can switch between expiries to see how the options differ across timeframes.
The chain therefore gives you a map of the whole contract range in one place. It does not tell you which contract will be profitable, and it does not show what the underlying will do next. It shows what exists and how it is priced at that moment.
Which strikes are at, in, or out of the money?
Traders describe each strike by comparing it with the current market price of the underlying. A strike that equals the market price is at the money. A call is out of the money when its strike is above the market price, and a put is out of the money when its strike is below it.
Consider this hypothetical example, with invented figures for illustration only. Suppose a stock called ABC trades at Rs 500. The Rs 500 strike is at the money. The Rs 520 call is out of the money because its strike is above the market, and the Rs 480 put is out of the money because its strike is below it.
How do bid and ask prices work?
Every quoted option has two prices. The bid is the highest price a buyer will pay, and the ask is the lowest price a seller will accept. The difference between them is the spread.
In the same hypothetical example, suppose the Rs 520 call shows a bid of Rs 18 and an ask of Rs 20. The spread is Rs 2. Someone who buys and then sells again at these quotes would lose that Rs 2 gap, so a wide spread is a cost to trading, not a neutral detail.
What does open interest tell you?
Open interest counts the contracts that are still outstanding. A contract drops out of open interest when it is closed, exercised, or settled. Open interest is therefore a measure of positions still alive, not a measure of how much has traded in a day.
Traders look at open interest by strike. Open interest alone does not tell you whether prices will rise or fall, so it is best read alongside other information rather than on its own.
How do traders read resistance and support?
A common reading is that the strike with the highest call open interest acts as a strong resistance level, and the strike with the highest put open interest acts as a strong support level. The logic is that many outstanding call contracts sit at that price, and many outstanding put contracts sit there too.
Continuing the hypothetical example, suppose the Rs 520 call has 3 lakh contracts of open interest, the highest among calls, and the Rs 480 put has 2.5 lakh, the highest among puts. A trader using this reading would treat Rs 520 as resistance and Rs 480 as support.
The catch is that this is a reading, not a rule. Open interest changes as contracts are opened and closed, and a stock can move past a level that the chain suggests is strong. The reading also depends on how recent the data is, so a chain viewed at one moment may look different later.
What are the limits of reading an option chain?
The chain is a snapshot across many strikes and expiries, which makes it dense. A high open interest figure at one strike does not explain why it is high, and it does not show the positions of any particular trader.
Reading a chain well requires knowing what each column means. Confusing open interest with trading volume, or treating support and resistance as guaranteed levels, are common errors. Each reading is a description of the data, and the data can change.
Frequently asked questions
Does an option chain cover only one expiry date?
No. An option chain covers multiple expiration dates and strike prices, so one view shows options across different timeframes and price levels.
Does high open interest mean the price will stop at that level?
Not by definition. Traders read the strike with the highest call open interest as a strong resistance level and the highest put open interest as a strong support level, but this is a reading of the data, not a guarantee.
What is the difference between bid and ask?
The bid is the highest price a buyer will pay for an option, and the ask is the lowest price a seller will accept.
Sources and last check
Facts in this article were checked against the sources below on 3 November 2026. Rules and figures can change; check the primary source before acting.
- groww.in (broker education)
- dhan.co (broker education)
- kotakneo.com (broker education)
- upstox.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.
Leave a Reply