Understanding Option Chain on NSE Site
To trade in options, we need to have following information with us
a) Underlying Security
b) Option Type – CALL or PUT
c) Contract Expiry
d) Strike price
Once you have all above information, you have unique identifier of the option contract that you can buy or sell in the market.
On NSE homepage, there is link called Option Chain. Option chain lists the available option contracts of an underlying security that are currently traded in the market.
The information is presented in tabular form as given below. If you are new to options trading then you will be confused with the amount of information present here.
Let’s look the pieces of this jig-saw puzzle in parts and understand them.
The table below can be logically divided in two parts. Left part of table has information related to CALL options and right part of table has information about PUT options.
In the center, we have various strike prices for option contract arranged in ascending order.
Expiry Date – This is the option contract’s expiry date. Various contract expiry that are traded in the market currently are listed here.
Open Interest - Number of open positions for a particular strike price.
LTP = Last traded price
Net Change – % change in the price at which a particular option is traded in market last, with respect to the closing price of previous trading day.
Volume – Number of contracts traded today
Bid Quantity – Quantity given in the last open buy order for this particular strike price.
Bid Price – Price given in the last open buy order for this particular strike price.
Offer Price – Price given in the last open Sell order for this particular strike price.
Offer Quantity – Quantity given in the last open Sell order for this particular strike price.
In other words, bid price indicate the price that buyers is wiling to pay to buy the option contract, and Offer price indicates the price at which seller is willing to sell.
You can click on Quote link on a particular row to get the more details.
You might notice that part of the table has cells with coloured background. These cells indicate that those particular strikes are In-The-Money. The cells with white background are for Out-of The-Money strikes.
Lets take and example and try to find the latest quote from the table. Lets say we want to Buy, NIFTY PUT, Strike 5000, Feb-10 expiry,
So you ensure that you are looking at option chain of February-10 expiry.
Then go to the row strike related to strike price = 5000. As you are interested in PUT, so pay attention to the numbers on the right part of the table in this row.
We see bid quantity of 1000 and bid price 239.20. I.e. someone is standing in the queue to buy the put at 239.20. So if we are a seller, then we will get this price for our market order. If we are placing market order to buy then we might have to pay more then 239.20.
Number in next 2 columns tells us that someone is ready to sell 350 quantities at 243.90. So if we are placing market buy order, then it will be filled at 243.90. Or if we are selling through market order then we might get a price less then 243.90.
Remaining info on this row is more for information purpose telling you that there are 4150 contracts are traded today, the price has fallen by 21..35% from yesterday’s price. The last trade took place at 242.00 and as of now, 2,656,950 is the open interest (OI). As the lot size for NIFTY is 50, this OI results in 2656950/50 = 53139 contracts.
Hope this information helps you in option trading. Feel free to leave comment below.
Happy Option Trading