Free lessons › Options Mastery › Options Foundations

Reading an options chain

Bid/ask, last, volume and open interest — what to look at first.

10 min · Beginner

What you'll learn

• Identify the key columns of an options chain and what each tells you
• Calculate the bid/ask spread as a percentage of the mid price
• Use volume and open interest to judge whether a contract is tradable

Key takeaways

• The bid is roughly what you can sell for now; the ask is roughly what you pay now.
• Spread as a percentage of mid tells you the hidden cost of getting in and out.
• Volume shows activity today; open interest shows how established the strike is.
• The last price can be stale, so never base your order on it.
• A cheap option with a wide spread and no open interest is often a trap.

Glossary

• Options chain — A table listing all strikes for an expiration, with prices and activity for calls and puts.
• Bid/ask spread — The gap between the best buying price and best selling price; a cost you pay to trade.
• Open interest — The number of contracts still open at a strike, a measure of how established that market is.
• Mid price — The halfway point between the bid and the ask, a common starting price for limit orders.

Unlock this lesson

The full lesson, quiz and practice task are included with the Academy plan. Elite includes a 7-day free trial. See plans

← Strike, expiration & moneyness Intrinsic value, extrinsic value & time decay →