Reading option chains
August 02, 2018

When you first come upon an option chain, you may get overwhelmed and think to yourself, where are all these random numbers coming from. In reality, once you learn more about it, you will realize how valuable the data presented in the chain really is. Not only it will help you make informed trading decisions, but it will also put things in perspective.

To start, log in to your preferred trading platform, tap Options and enter your symbol to view the option chain. Let's use IQ Edge for this example.

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Refer to the table below to learn about each one of the fields in the option chain.

LastLast traded price for the security
ChgDollar change (from the previous close)
BidThe latest price offered to buy an option
AskThe latest price offered to sell an option
VolNumber of shares or contracts traded in a security or an entire market during a given period of time
Open intTotal number of options contracts that are not closed or delivered on a particular day
Implied volEstimated volatility of a security's price
Chg %Percentage change (from the previous close)
Bid szNumber of shares/contracts a buyer is willing to purchase at the quoted bid price
Ask szNumber of shares/contracts a seller is selling at a quoted ask price
DeltaRatio comparing the change in the price of the underlying asset to the corresponding change in the price of the derivative
GammaRate of change for delta with respect to the underlying asset's price
ThetaMeasure of the rate of decline in the value of an option due to the passage of time
VegaAmount that the price of an option changes compared to a 1% change in volatility
RhoRate at which the price of a derivative changes relative to a change in the risk-free rate of interest

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