What Is The Options Chain?
What Is The Options Chain?
While the movie “The Matrix” isn’t quite real, looking at the options chain might be the next closest thing for a new options trader. At a quick glance, the options chain may look a bit overwhelming. To the undiscerning eye, the number on the options chain may appear to be random but in fact, provide traders with all of the information needed to execute an order.
- The options chain lists all options contracts for any underlying asset.
- An options chain has two sections, calls and puts.
- The options chain displays the premium, strike price, greeks, and other important metrics for calls and puts.
- The options chain matrix is updated in real-time, showing the last price, trading volume, and best bid offer for calls or puts.
- Options Chain Information
Options chain information can be found on the majority of financial websites that provide options pricing. In this blog post, we will look at the options chain within thinkorswim. The thinkorswim trading platform is owned by T.D. Ameritrade and has a robust options chain feature.
Thinkorswim Options Chain
The thinkorswim options chain provides as much detail as a trader could possibly want. As seen in the video above, an options trader can add implied volatility, greeks, volume, and other metrics needed to price anything from a basic options trade to an advanced spread.
Options Expiration Date
When initially viewing the options chain, the options contracts will are sorted by expiration date. If you want to see the strike prices for a contract in any maturity date, clicking the drop-down arrow on the left side will expand the options chain. Some stocks have daily, weekly, and monthly expiration dates. Contracts like SPY, SPX, NDX, and other high-volume ETFs will have more expiration dates.
The strike price or the agreed-upon price can be found in the center of the list. Some option contracts will have strike prices in $2.50, $5.00, and $10.00 dollar intervals. This depends on the share price and the volume of that specific contract.
Calls vs. Puts
The thinkorswim options chain is broken into two main sections, divided by the strike price in the center. The left section of the list is allocated to calls, and the right portion of the list is allocated to puts. As a brief recap, a call option contract provides the owner with the option to buy 100 shares of the underlying asset at an agreed-upon price anytime before expiration. A put option contract gives the buyer the right to sell 100 shares of the underlying asset, at an agreed-upon price, before the contract expiration.
The greeks are critical variables that indicate the sensitivity of an option to Theta, Delta, Vega, and Gamma. Traders who want to learn more about “the greeks” can check out this in-depth blog that includes detailed breakdowns of each metric.
The option chain is a great way to understand how much an option’s price will cost. They’re listed in easy-to-follow order with each maturity date and strike price right next to one another so that you can find out whether it’s worth buying or selling right away!
Understanding The Options Chain
The options chain is a convenient way to find all relevant data for each options contract. This data is usually segmented by the expiration date of the options contract. The majority of online brokers display their quotes through this type of chain format, which provides clarity when scanning activity levels, among other important metrics like open interest and price changes.
Traders can easily track an asset’s trading activity, including how often it trades, the volume of those transactions, and which strikes have been most popular. To learn more about how you can master the options chain in thinkorswim, check out our free trading room, where we discuss the fundamental aspects of trading.