Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.
An options chain is like a menu of all the available options contracts for a specific security, like a stock or other asset. The options chain, or options matrix, shows the listed puts, calls, strike prices, volume and pricing information, within a certain maturity (or expiration date) for a specific security.
An options chain provides a handy visual way to track important information necessary for options trading, including implied volatility.
Key Points
• Options chains list available contracts, including puts, calls, expiration dates, strike prices, and volume.
• Calls allow buying at a set price, while puts allow selling, both on or before expiration.
• In-the-money options may be profitable, out-of-the-money options typically are not, based on strike and market prices.
• Options chains help gauge market conditions and liquidity, providing essential trading data.
• Additional data like implied volatility may also be provided, enhancing trading decisions.
Understanding the Options Chain
To understand what an options chain is, it’s essential to first understand how options trading works. With this knowledge, you can build options trading strategies.
Options contracts are derivatives in that they allow investors to speculate on movements of an underlying asset without direct ownership. They provide the right, but not necessarily the obligation, to buy or sell a stock at a specified strike price on or before expiration.
But options trading strategies can be quite risky and are typically undertaken by experienced investors.
While options can get quite complex, they generally fall into two kinds of options: calls vs. puts.
Calls are options that grant the right to buy a stock at a preset price (the strike price) on or before the expiration date, while puts grant you the right to sell the underlying asset at a specific price until the expiration.
Call Options
A standard call option contract typically grants an investor the right to buy 100 shares of an underlying stock or other security at the strike price. A call option can be appealing because it provides an investor with a potential way to gain exposure to a stock’s price movements without having to pay the full price for 100 shares.
The investor pays what’s known in options terminology as the “premium” on each share, which is typically much less than the current price of the stock.
Put Options
By contrast, a put option is a contract that allows the investor to sell shares at a certain price at a specified time in the future. The seller of the put option has the obligation to buy the shares from the put buyer, if the put buyer chooses to exercise the option.
If call options are a way to profit from a stock going up in price without having to own the stock itself, then put options are a way to profit from the fall of a stock’s price without having to short the stock (i.e. borrow the shares and then buy them back at a lower price).
Just like trading stocks and other assets, options can be traded using an online investing platform or a traditional brokerage.
In-the-Money and Out-of-the-Money Options
Options can be “in the money” (ITM) or “out of the money” (OTM). The terms refer to the relationship between the options strike price and the market value of the underlying asset.
Understanding the difference between being in-the-money or out-of-the-money helps determine potential profitability and informs decisions about whether to exercise the option.
• A call option is in the money if the strike price is lower than the current market price of the underlying security. An investor holding such a contract could exercise the option to buy the security at a discount and sell it for a profit immediately.
• An out-of-the-money call option occurs when the option’s strike price is higher than the current market price of the underlying stock. That means the option doesn’t have any intrinsic value. Any value the option has is based on the possibility that the price of the underlying security will go up in the future.
The reverse applies to puts. A put would be in the money if the strike price is higher than the current market price of the underlying security, and out of the money if the strike price is lower.
What Is an Options Chain?
An options chain is a table displaying different options, along with key data points. The options chain can vary depending on who is providing it, but some of the terms can include:
• the strike price
• last price
• trading volume
• the bid
• the ask
• net change
Once you understand basic options concepts like calls and puts, an options chain will be pretty easy to read.
From there, more complicated options trading strategies, like options trading straddles, can be explored.
Finally, user-friendly options trading is here.*
Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.
*Check out the OCC Options Disclosure Document.
Options Chain Example
Here is a hypothetical example of an options chain for Company ABC.
Call options for January 27, 2025
| Contract name | Last Trade Date | Strike | Last Price | Bid | Ask | Change | Volume | Open Interest |
|---|---|---|---|---|---|---|---|---|
| ABC230127C00240000 | 2025-01-26 03:37PM EST | 240.00 | 15.22 | 12.95 | 15.00 | -2.58 | 15 | 54 |
| ABC230127C00245000 | 2025-01-26 03:53PM EST | 245.00 | 11.00 | 9.10 | 12.15 | -3.33 | 68 | 111 |
| ABC230127C00250000 | 2025-01-26 03:59PM EST | 250.00 | 8.80 | 8.20 | 10.80 | -2.55 | 96 | 175 |
Options chains aren’t standardized, and different providers may display varying levels of detail or additional metrics.
Additional information could include more detail on price fluctuations, such as percentage price changes. Some platforms provide additional data, such as implied volatility, which measures the market’s expectations for future price fluctuations.
Reading the Options Chain
Once you understand the terms listed in the options chain, it’s relatively easy to decode. Reading from left to right in the hypothetical options chain above:
• Contract name: Just as the fictional ABC company has a stock ticker, options have an alphanumeric identifier. For instance, “ABC250127C00240000” refers to an option to buy ABC shares by January 27, 2025 for $240. In other words, this is a call option with a strike price of $240 that expires on January 27, 2025.
• Last trade date: The date and time when the option was last traded.
• Strike: The predetermined price at which the option holder can buy (calls) or sell (puts) the underlying asset before the expiration date.
• Last price: The most recently traded or posted price of the option.
• Bid: The highest price someone is willing to pay for the option.
• Ask: The lowest price someone is willing to sell the option.
• Change: How the price has changed since the close of the previous trading session.
• Volume: The number of options contracts traded the most recent day that trading has been open.
• Open interest: These are the options contracts that haven’t been closed — meaning exercised (i.e. the stock has been bought or sold at the pre-arranged price) or otherwise settled.
How Options Chains Can Help You Trade Options
Options chains are a key tool for trading options. Their role in options trading depends on how brokerages present them and how well they fit into a trader’s overall strategy.
For example, an experienced trader would be able to gauge the market in terms of price movements and higher and lower liquidity. These are key points to know for efficient trade executions and potential profitability.
For example, a trader wanting to assess market conditions for the first call option in the matrix above, may analyze the last price, bid, ask, and net change.
Any brokerage that allows you to trade options will provide the type of information seen in an options chain, as it is necessary for options to be priced and for investors and traders to make informed decisions about options trading.
Brokerages typically also have various deposit and educational or knowledge requirements for options trading as well.
The Takeaway
Options are highly complex derivatives, and investors need to be experienced enough to interpret a series of critical data points in order to build an effective options strategy. One tool that can be helpful for traders is using an options chain, or options matrix.
An options chain is similar to a master list of available options contracts for a specific security (the underlying asset). It shows the puts, calls, expiration dates, strike prices, and volume and pricing information for that asset. By reading these charts, traders can decide which options fit their strategy.
Investors who are ready to try their hand at options trading despite the risks involved, might consider checking out SoFi’s options trading platform offered through SoFi Securities, LLC. The platform’s user-friendly design allows investors to buy put and call options through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.
Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors. Currently, investors can not sell options on SoFi Active Invest®.
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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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