How to read an options chain

Most chains put calls on the left, puts on the right and strike prices down the middle, with one table per expiration date. Rows that are in the money are usually shaded. For calls that means strikes below the current price, for puts strikes above it.

Short dated expirations sit at the top of the expiration list. Weeklies and daily expirations on indices and large ETFs can make that list long, so most traders start with the expiration that matches how long they expect the trade to take.

Bid and ask: the best price someone will pay and the best price someone will sell for. The midpoint is a fair reference, and the gap between them is a cost you pay on the way in and again on the way out.

Volume and open interest: volume counts contracts traded today, open interest counts contracts still open as of the last close. High open interest with a tight spread is what liquid looks like.

Implied volatility: the volatility the option's price implies. Higher IV means more expensive premium for the same strike and expiry.

Greeks: delta is roughly how much the option moves per $1 in the stock, gamma how fast delta changes, theta the daily time decay, and vega the change per one point of IV.

Say a stock trades at $100 and you look at the $105 call expiring in 30 days, quoted $1.20 bid and $1.30 ask. The mid is $1.25. One contract covers 100 shares, so it costs about $125 plus fees.

At expiration the call is worth something only above $105. Your breakeven is the strike plus the premium, $106.25. Below $105 the whole $125 is lost. The 10 cent spread is 8% of the premium, which is wide enough to matter if you plan to trade in and out often.

Open interest stacked at a few strikes shows where positioning sits. Gamma exposure, max pain and the put to call ratio are all calculated from the same chain. Reading them alongside the prices tells you which strikes the market is watching.