Stock Market · Options Theory

Reading the option chain

The option chain is a table showing all available strikes and expiries for a security, with their premium, OI, and volume. It's the most information-dense single screen in options trading.

The layout (NSE option chain)

The central column is the STRIKE PRICE. Calls are on the left; puts are on the right.

For each strike, on both sides, you see:

• OI (Open Interest): contracts outstanding
• Change in OI: how much OI changed today
• Volume: contracts traded today
• IV: implied volatility
• LTP (Last Traded Price): current premium
• Bid / Ask: spread

Reading the chain for market signals

High call OI at a specific strike = significant resistance. Option sellers have written many calls at this level, creating a 'wall' that benefits from price staying below.

High put OI at a specific strike = significant support. Put sellers need price to stay above this level, they'll defend it.

> The strike with maximum combined OI (calls + puts) is often referred to as the 'max pain' point, more on this in the next chapter.

PCR from the option chain

Put-Call Ratio (PCR) = Total put OI ÷ Total call OI

PCR > 1: more puts than calls. Bearish sentiment dominates.

PCR < 0.7: more calls than puts. Bullish sentiment, potentially frothy.

Option chainNSE website (free, real-time) or Sensibull for visual presentation

IV across strikes

Reading the IV column shows you the volatility skew visually. OTM puts will have higher IV than OTM calls. Confirming the put skew discussed earlier. ATM strikes will have the lowest IV.

Takeaway. The option chain shows all strikes, OI, volume, IV, and premiums. High OI at a strike = support/resistance. PCR above 1 = bearish sentiment. Read chains before trading to understand where market participants have positioned.