Understanding Option Chain on NSE Site

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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.
Example of NIFTY Option Chain for Feb-2010 Expiry

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

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4 Comments on “Understanding Option Chain on NSE Site”

  • shiva
    8 August, 2010, 10:21

    i need to understand more on this please can i have your contact details please

  • Trader anup
    13 August, 2010, 6:15

    Shiva, please use contact-me section of this site to reach me at personal level. TraderAnup

  • Raj Shekhar
    21 August, 2010, 12:15

    namaste Bhai
    What is the diff between In the money and Out of the Money options.

    “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.”
    Thanks

  • Trader anup
    23 August, 2010, 5:33

    Raj, the option price is made up of 2 components – real value and time value.
    In-the-money, means the options has some real value.. Eg for call option of strike 5300, if market is above 5300, then this option has some value i.e. if market is at 5520, then the real value of option is 5520 – 5300 = 220 rs. But a option of strike 5600 (strike price above current market value) is out-of-money by 5600 -5520 = 80 rs.. i.e. mkt has to move by 80 points to really see some value in this option. Till that time, the price is just the time value. Trader Anup

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