How to read an options chain

Read a chain by contract identity, executable quotes, exposure, and liquidity. Each column answers a different question.

By OptionsKing. Publisher and editorial methods.

A chain contains possible contracts, not recommendations. First identify the expiration and strike so you know what agreement you are comparing. Next read the current bid and ask, then use delta and trading activity to assess exposure and execution. The running example shows why the busiest row can still be unsuitable.

Start with one expiration

Chipotle (CMG) at $38.40 on a Tuesday. This is the September 19 expiry, 45 days out, call side.

Read the quote and risk columns

Strike. The price in the contract. Everything else on the row is priced off the distance between it and $38.40.

Bid and ask. The bid is what somebody will pay you right now. The ask is what somebody will sell to you for. As a seller you get the bid, or something between the bid and the mid if you work the order. The next page covers what to do with them, including why the mid is a target and not a price.

Mid. Halfway between. Most calculators and most screenshots quote it. Nobody trades at it by right.

Implied volatility. The volatility figure that makes a pricing model produce the price already showing. It is not a forecast and it is not the stock's historical volatility. On this chain it runs from 41.0 percent at the $36 call down to 34.1 percent at the $45, which is the skew. There are ten articles on this one column.

Delta. Three things at once: how much the option moves per dollar of stock, roughly how many shares the contract behaves like, and a rough stand-in for the odds it finishes in the money. The third use is the one sellers lean on and it is consistently a couple of points off. The size and direction of the approximation error depend on the contract.

Volume and open interest. How many contracts traded today, and how many are still open from every day before. Different questions with different answers, and confusing them costs you fills.

The column that lies

Last price. It is on every chain and it is the first thing beginners read.

An option's last trade can be from three hours ago, or from Monday. On the $44 call, twelve contracts traded all day. If the stock has moved 60 cents since whenever those twelve printed, the last price is describing a market that no longer exists. On a quiet strike it can be stale by days.

The bid and ask describe a quoted market at their timestamp. Last price describes a completed trade at its own timestamp. Check both timestamps rather than assuming either is live.

Reading it as a seller, in order

Before these four passes, confirm the contract type, deliverable and quote timestamp. A narrow spread on an old quote is not evidence of current liquidity. The sequence below is an example workflow; adjust the strike criteria to the sale price or purchase commitment you actually want.

Four passes, and the whole thing takes under a minute once it is habit.

First, the delta column. Find your band. At 0.20 to 0.30 that is the $42 and $43 rows here. Everything above and below is a different trade.

Second, the bid. Not the mid. $0.71 on the $42, $0.49 on the $43. That is what the trade is worth if you have to hit somebody, and it is the conservative number to plan with.

Third, the spread. $42 is 5 cents wide on a 73 cent option, which is 6.8 percent. $44 is 5 cents wide on a 35 cent option, which is 14.3 percent. Same nickel, very different tax.

Fourth, open interest. 9,204 on the $42, 640 on the $44. The first is a market. The second is a strike where you may sit for twenty minutes waiting for a fill and then take the bid anyway.

Use open interest as a liquidity clue

Look at the $40 row. Highest volume on the chain at 2,946 contracts, and by far the highest open interest at 22,107. More positions live there than anywhere else in this expiry.

It is 0.416 delta.

For a covered call seller that is close to a coin flip on losing the shares, in exchange for $138. Nothing about the crowd's presence makes it a good strike for you. Round numbers attract open interest the way round numbers attract everything: people think in tens. If you are looking for the strike everyone else picked, $40 is it, and a screen built on delta, liquidity and return throws it out.

Open interest is a liquidity signal. It is not a recommendation, and reading it as one is the most common mistake made with this table.

Two things the chain will not tell you

Whether there is an earnings date inside the expiry. Nothing in these columns says so, and it is the single most common reason a screened trade should be vetoed. An unusually fat IV column against the neighbouring expiry is the hint, and it is a hint rather than an answer.

Whether the contract is standard. An adjusted contract sits on the same chain, often with a modified symbol, and may deliver something other than 100 shares. Spotting one is a page of its own.

Common questions

Sources

• OCC / Options Industry Council, Options Basics FAQ
• OCC, Characteristics and Risks of Standardized Options

Rules and thresholds above were checked against these documents on August 4, 2026. Exchange and broker rules change. Confirm anything you are about to act on with your own broker.

Keep reading

• What to do with the bid, the ask and the mid
• The two size columns, and which one to trust
• Where the money is, on the same chain

Do the math on your own trade

• Covered call calculator premium, break-even, static and if-called return, annualized.
• Assignment probability calculator delta to keep-odds, with the caveat that matters.
• Black-Scholes calculator price and Greeks from five inputs.

Every price in this article is an illustrative worked example, not a quote. Read Options basics for the rest of the series, and the disclaimer before you act on any of it. Selling options carries real risk of loss, and the loss can be far larger than the premium you collected.