Table of Contents
Introduction to Option Chain
What Is an Option Chain?
Key Components of an Option Chain
Call vs. Put Options in the Chain
How to Read an Option Chain
Open Interest (OI) Analysis
Implied Volatility (IV) Analysis
Strike Price Selection
Support and Resistance Levels from Option Chain
Option Chain for Intraday & Swing Trading
1. Introduction to Option Chain
In the world of options trading, success is not just about buying calls or puts randomly—it’s about understanding market data. One of the most important tools for analyzing this data is the Option Chain. Whether you're a beginner or an advanced trader, mastering option chain analysis can help you identify market sentiment, key levels, and trading opportunities.
2. What Is an Option Chain?
An Option Chain, also known as an Options Matrix, is a tabular representation of all available option contracts (both Call and Put) for a particular underlying asset—like Nifty, Bank Nifty, Reliance, TCS, etc.—for a specific expiry date.
It shows:
Strike prices
Premiums (Prices)
Open interest (OI)
Volume
Implied volatility (IV)
Bid/ask prices
Think of it like a menu card for options, showing all the possible trades you can take, and key stats about each.
3. Key Components of an Option Chain
✅ Strike Price:
The price at which you can buy (Call) or sell (Put) the underlying asset.
✅ Premium (LTP):
The last traded price (LTP) of the option.
✅ Open Interest (OI):
The number of open contracts for a strike price. Indicates trader interest.
✅ Change in OI:
The change in open positions compared to the previous day.
✅ Volume:
The number of contracts traded in the current session.
✅ Implied Volatility (IV):
Market's expected volatility of the underlying asset.
4. Call vs. Put Options in the Chain
In every option chain, you’ll see two sections:
Call Options (Left side) Put Options (Right side)
Bullish expectation Bearish expectation
Buy if expecting upside Buy if expecting downside
Sell if expecting sideways/down Sell if expecting sideways/up
Usually, the middle column contains strike prices, with Call data on the left and Put data on the right.
5. How to Read an Option Chain
Let’s take an example:
Assume Nifty is trading at 22,200. You look at the Nifty option chain.
You’ll see multiple rows of strike prices (e.g., 22,000, 22,100, 22,200…) and for each, data like LTP, OI, IV.
Look for:
ATM (At-the-money): Closest strike to the current price (22,200).
ITM (In-the-money): For calls, strikes < spot; for puts, strikes > spot.
OTM (Out-of-the-money): For calls, strikes > spot; for puts, strikes < spot.
Example:
22,200 is ATM.
22,100 Call is ITM.
22,300 Call is OTM.
6. Open Interest (OI) Analysis
OI is one of the most powerful indicators in option chain analysis. It shows where traders are placing their bets.
✔️ What to Look For:
High OI = Strong interest at that strike.
Increase in OI = New positions being added.
Decrease in OI = Positions being closed.
✔️ Interpretations:
High OI in Call → Resistance level.
High OI in Put → Support level.
Let’s say:
22,500 Call has 30 lakh OI → Strong resistance.
22,000 Put has 35 lakh OI → Strong support.
This gives you the trading range of Nifty: 22,000 to 22,500.
7. Implied Volatility (IV) Analysis
IV represents the market's future expectations of volatility. Higher IV means higher premiums.
✔️ Why IV Matters:
When IV is high, options are expensive.
When IV is low, options are cheaper.
✔️ Practical Use:
Sell options when IV is very high (premium is inflated).
Buy options when IV is low (premium is cheap).
8. Strike Price Selection
Choosing the right strike is key for successful trading.
✔️ For Buying Options:
Buy slightly ITM for better delta and time value.
ATM works for short-term, fast movements.
✔️ For Selling Options:
Sell OTM options with high OI and low IV.
✔️ Tip:
Always check the OI and IV before choosing a strike. Avoid illiquid strikes (with low OI or volume).
9. Support and Resistance Levels from Option Chain
You can spot support and resistance based on OI data.
✔️ Support:
Strike where Put OI is highest.
E.g., 22,000 Put with highest OI = Support zone.
✔️ Resistance:
Strike where Call OI is highest.
E.g., 22,500 Call with highest OI = Resistance zone.
This helps you create a trading range.
10. Option Chain for Intraday & Swing Trading
✅ Intraday Trading:
Watch change in OI during live market.
Spike in Call OI → Possible resistance forming.
Spike in Put OI → Possible support forming.
✅ Swing Trading:
Analyze overall OI trend.
Look at monthly expiry data.
Identify positional buildup or unwinding.
Introduction to Option Chain
What Is an Option Chain?
Key Components of an Option Chain
Call vs. Put Options in the Chain
How to Read an Option Chain
Open Interest (OI) Analysis
Implied Volatility (IV) Analysis
Strike Price Selection
Support and Resistance Levels from Option Chain
Option Chain for Intraday & Swing Trading
1. Introduction to Option Chain
In the world of options trading, success is not just about buying calls or puts randomly—it’s about understanding market data. One of the most important tools for analyzing this data is the Option Chain. Whether you're a beginner or an advanced trader, mastering option chain analysis can help you identify market sentiment, key levels, and trading opportunities.
2. What Is an Option Chain?
An Option Chain, also known as an Options Matrix, is a tabular representation of all available option contracts (both Call and Put) for a particular underlying asset—like Nifty, Bank Nifty, Reliance, TCS, etc.—for a specific expiry date.
It shows:
Strike prices
Premiums (Prices)
Open interest (OI)
Volume
Implied volatility (IV)
Bid/ask prices
Think of it like a menu card for options, showing all the possible trades you can take, and key stats about each.
3. Key Components of an Option Chain
✅ Strike Price:
The price at which you can buy (Call) or sell (Put) the underlying asset.
✅ Premium (LTP):
The last traded price (LTP) of the option.
✅ Open Interest (OI):
The number of open contracts for a strike price. Indicates trader interest.
✅ Change in OI:
The change in open positions compared to the previous day.
✅ Volume:
The number of contracts traded in the current session.
✅ Implied Volatility (IV):
Market's expected volatility of the underlying asset.
4. Call vs. Put Options in the Chain
In every option chain, you’ll see two sections:
Call Options (Left side) Put Options (Right side)
Bullish expectation Bearish expectation
Buy if expecting upside Buy if expecting downside
Sell if expecting sideways/down Sell if expecting sideways/up
Usually, the middle column contains strike prices, with Call data on the left and Put data on the right.
5. How to Read an Option Chain
Let’s take an example:
Assume Nifty is trading at 22,200. You look at the Nifty option chain.
You’ll see multiple rows of strike prices (e.g., 22,000, 22,100, 22,200…) and for each, data like LTP, OI, IV.
Look for:
ATM (At-the-money): Closest strike to the current price (22,200).
ITM (In-the-money): For calls, strikes < spot; for puts, strikes > spot.
OTM (Out-of-the-money): For calls, strikes > spot; for puts, strikes < spot.
Example:
22,200 is ATM.
22,100 Call is ITM.
22,300 Call is OTM.
6. Open Interest (OI) Analysis
OI is one of the most powerful indicators in option chain analysis. It shows where traders are placing their bets.
✔️ What to Look For:
High OI = Strong interest at that strike.
Increase in OI = New positions being added.
Decrease in OI = Positions being closed.
✔️ Interpretations:
High OI in Call → Resistance level.
High OI in Put → Support level.
Let’s say:
22,500 Call has 30 lakh OI → Strong resistance.
22,000 Put has 35 lakh OI → Strong support.
This gives you the trading range of Nifty: 22,000 to 22,500.
7. Implied Volatility (IV) Analysis
IV represents the market's future expectations of volatility. Higher IV means higher premiums.
✔️ Why IV Matters:
When IV is high, options are expensive.
When IV is low, options are cheaper.
✔️ Practical Use:
Sell options when IV is very high (premium is inflated).
Buy options when IV is low (premium is cheap).
8. Strike Price Selection
Choosing the right strike is key for successful trading.
✔️ For Buying Options:
Buy slightly ITM for better delta and time value.
ATM works for short-term, fast movements.
✔️ For Selling Options:
Sell OTM options with high OI and low IV.
✔️ Tip:
Always check the OI and IV before choosing a strike. Avoid illiquid strikes (with low OI or volume).
9. Support and Resistance Levels from Option Chain
You can spot support and resistance based on OI data.
✔️ Support:
Strike where Put OI is highest.
E.g., 22,000 Put with highest OI = Support zone.
✔️ Resistance:
Strike where Call OI is highest.
E.g., 22,500 Call with highest OI = Resistance zone.
This helps you create a trading range.
10. Option Chain for Intraday & Swing Trading
✅ Intraday Trading:
Watch change in OI during live market.
Spike in Call OI → Possible resistance forming.
Spike in Put OI → Possible support forming.
✅ Swing Trading:
Analyze overall OI trend.
Look at monthly expiry data.
Identify positional buildup or unwinding.
Hello Guys ..
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Guys ..
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.