How to Read an Option Chain

An option chain is a table that lists every call and put option available on an index or stock, organised by strike price. To read it, focus on five columns — Strike, LTP, Open Interest, Change in OI, and Implied Volatility. Calls sit on the left, puts on the right, and the row closest to spot is the ATM strike.

That's the definition. The reason most beginners still get lost is that NSE's actual option chain has 22 columns and looks like a wall of numbers. Once you learn which five to trust, the wall turns into a story. And the story tells you where the market expects price to go, and where it doesn't.

What an Option Chain Actually Shows You

Think of the option chain like the menu at a restaurant. Every dish (each option contract) is listed on a single page, with its price next to it. You don't have to order anything. You just walk in, see what's available, and decide.

For NIFTY, the chain lists option contracts at every strike from well below spot to well above spot, for the next few expiries. Each row is one strike. Each strike has two sides: a call (right to buy) and a put (right to sell).

NSE's chain follows a strict layout. Calls live on the left half, the strike price sits in the middle as a vertical spine, and puts mirror the calls on the right half. The same five columns appear on both sides. They just describe two different contracts.

The orange row in the middle is the ATM strike, the listed strike closest to spot. The green-shaded cells on the left are ITM calls (strike below spot). The green-shaded cells on the right are ITM puts (strike above spot). Everything unshaded is OTM.

If this is the first time you've seen ATM, ITM, and OTM in one diagram, the article on ITM, ATM and OTM options explained walks through the full vocabulary with examples. The rest of this piece assumes you've got the basics.

The Five Columns That Actually Matter

NSE's full option chain shows more than twenty columns in total across calls, strikes, and puts. For 95% of traders, five do the work. Learn these first; everything else is detail.

1. Strike Price: the price at which the option lets you buy (call) or sell (put) the underlying.
2. LTP (Last Traded Price): the last traded premium of that option. For actual order execution, also check bid, ask, and the spread between them.
3. Open Interest (OI): the total number of contracts currently live at that strike. Big OI means big participation.
4. Change in OI: how OI has moved since market open today. Positive means fresh positions are being built; negative means positions are being unwound.
5. Implied Volatility (IV): how expensive the option is in volatility terms. Higher IV means a fatter premium for the same strike.

Walk through any single row of the chain reading those five numbers, on both sides, and you'll know more about that strike than 80% of retail traders looking at the same screen.

Why these five? Because together they answer three questions a trader actually needs answered: what does it cost (LTP), how crowded is this strike (OI + Change in OI), and how rich is the premium (IV). The other columns are inputs to those answers, not separate insights.

One nuance worth knowing: NSE displays IV for reference. It's dynamically computed using the option's market price and the underlying, so treat it as an estimate, not a fixed fact. The number you see at 10:01 AM and the number at 10:03 AM can differ for the same strike.

Reading the Call Side vs the Put Side

Calls and puts are mirror images of each other on the chain. If you understand one side, you flip the logic and you understand the other.

A call option gives the buyer the right to buy at the strike. The call buyer is betting the underlying will go up. A put option gives the buyer the right to sell at the strike. The put buyer is betting the underlying will go down.

That's why the shading flips. ITM calls are the lower-strike rows (strike below spot), so the green shading sits on the upper-left of the chain. ITM puts are the higher-strike rows (strike above spot), so the green shading sits on the lower-right.

Once you've internalised this, you can glance at any chain and instantly see where the in-the-money zones are without doing any arithmetic.

For a fuller picture of how each side behaves on its own, see the article on what a call option is and the companion piece on what a put option is.

ATM, ITM, and OTM at a Glance

The three terms are the entire vocabulary of strike positioning. They depend on one thing only: where the strike sits relative to the current spot price.

Using our example: NIFTY spot is 24,520. NSE lists strikes at 50-point intervals. So 24,500 is the listed strike closest to spot. That's the ATM (at-the-money) strike. From there:

• For calls, strikes below spot are ITM (24,400, 24,300…) and strikes above spot are OTM (24,600, 24,700…).
• For puts, it's the opposite: strikes above spot are ITM, strikes below spot are OTM.

The ATM strike has the highest time value in the premium. There's the most uncertainty about whether it'll finish ITM or OTM by expiry, so the option seller demands the highest compensation for that uncertainty. As you move away from ATM in either direction, premiums drop. Far OTM options cost peanuts because they have almost no chance of ending up in the money.

Reading Sentiment from Open Interest

This is where the chain stops being a price list and starts becoming a sentiment indicator. Open interest tells you where money is sitting, not just what something costs.

Look back at the mock chain. On the call side, the highest OI is at 24,700 (around 34.5 lakh contracts). On the put side, the highest OI is at 24,400 (around 31.8 lakh). These aren't random numbers — they're the strikes the market has chosen as its battleground.

The conventional reading: traders often watch the highest-OI call strike as a possible near-term resistance zone, because option writers (sellers) at that strike have a strong incentive to keep spot below it. The highest-OI put strike is often watched as a possible support zone, for the mirror reason: put writers want spot to stay above it. It's a positioning clue, not a prediction.

So for this snapshot, the market's implied range for NIFTY this expiry is roughly 24,400 to 24,700. Not a prediction. A consensus zone, drawn by where contracts are stacked.

The Change in OI column adds the second layer. If 24,700 calls show a big +OI increase intraday, fresh sellers are coming in to defend that level. That's a bearish sign.

If 24,400 puts show OI rising, fresh sellers there think NIFTY won't break down. Read both columns together and you get a live picture of which side is building or unwinding positions.

A Beginner's Reading Order

Until the chain feels natural, walk through it in this exact sequence every time. Six weeks of repetition and you won't need the checklist.

• Step 1 · Anchor

  Find the spot price

  The top of NSE's chain shows the underlying's current spot. Note it. Everything else on the chain is relative to this number.

• Step 2 · Orient

  Find the ATM strike

  It's the listed strike closest to spot. Mentally draw a horizontal line at that row. Everything above and below is ITM or OTM relative to this anchor.

• Step 3 · Read positioning

  Compare call OI and put OI

  Scan both sides for the strikes with the largest OI. These are the levels the market has chosen as its battleground for this expiry.

• Step 4 · Read intent

  Check Change in OI

  Is OI building or unwinding at those big-OI strikes today? Build-up confirms the level; unwinding warns that the level is losing conviction.

• Step 5 · Sanity check

  Check IV before assuming a premium is cheap

  A ₹20 option isn't "cheap" if its IV says the market expects an outsized move. Compare IV across strikes — far OTM options often have inflated IV that explains their premium.

Three Traps Beginners Fall Into

Reading the chain wrong is a more expensive mistake than not reading it at all. These three patterns burn more new options traders than any other.

Trap 1 — The "cheap option" illusion

Far OTM options cost ₹2 or ₹5 and look like cheap lottery tickets. The reason they're cheap is that the market thinks they have almost no chance of finishing ITM. Buying a basket of ₹5 options because "if even one works, I'll be rich" is a tax the market collects from beginners every expiry.

Trap 2 — Reading old open interest

OI is a snapshot. On expiry day, levels that looked rock-solid Monday morning can melt by Thursday afternoon. Always pair the OI column with the Change in OI column. If big OI is bleeding out, the support or resistance it implied is bleeding out with it.

Trap 3 — Confusing Volume with OI

Volume is how many contracts traded today. Open Interest is how many are still live, regardless of when they were opened.

A strike can have huge volume and tiny OI (lots of intraday churn, no overnight commitment) or low volume and huge OI (a long-standing position nobody is touching today). The two columns answer different questions; don't read them as one.