How to read an option chain
An option chain looks crowded, but it is one simple table: strikes in the middle, calls on the left and puts on the right.
A real NIFTY example
This is part of the NIFTY chain for the 12 May 2026 expiry, recorded on 6 May 2026 at 10:35, when NIFTY was at 24,118.55.
| CE OI | CE LTP | Strike | PE LTP | PE OI |
|---|---|---|---|---|
| 10.4L | 255.00 | 24,050 | 147.90 | 16.1L |
| 51.2L | 225.85 | 24,100 | 169.15 | 50.6L |
| 45.2L | 199.30 | 24,150 | 191.50 | 28.3L |
| 123.5L | 173.85 | 24,200 | 216.55 | 51.4L |
| 38.9L | 150.80 | 24,250 | 243.25 | 9.9L |
What each column means
- Strike: the price level the contract refers to. NIFTY strikes here are 50 points apart.
- CE LTP and PE LTP: the last traded premium for the call and the put at that strike.
- OI (open interest): how many contracts are open at that strike, shown here in lakhs (L).
Notice the pattern: as the strike rises, call premiums fall and put premiums rise. A higher strike makes a call harder to profit from and a put easier.
Finding ATM, ITM and OTM strikes
With NIFTY at 24,118.55, the nearest strike is 24,100. That is the at-the-money (ATM) strike.
- In the money (ITM): strikes with intrinsic value. The 24,050 CE is ITM because NIFTY is 68.55 points above its strike.
- Out of the money (OTM): strikes with no intrinsic value. The 24,250 CE is OTM because NIFTY is below its strike.
What is inside a premium
A premium is intrinsic value plus time value. Take two calls from the table:
- 24,050 CE at 255.00: 68.55 intrinsic value plus 186.45 time value.
- 24,250 CE at 150.80: no intrinsic value, so all 150.80 is time value. If NIFTY stays below 24,250 until expiry, all of it disappears.
What a trade costs
Multiply the premium by the lot size. One lot of NIFTY was 65 in this data, so buying the 24,250 CE costs 150.80 × 65 = ₹9,802. That is the most a buyer can lose. A seller receives that amount but takes on much larger risk.
What open interest can and cannot tell you
The largest OI in this table is at the 24,200 CE (123.5L). Large OI shows many open positions at that strike, and traders often watch such levels. It does not tell you the market will stop there, because every open contract has both a buyer and a seller.
Watch for stale prices
LTP is the last trade, which can be hours old in a thinly traded strike. If neighbouring premiums look out of order, the strike probably has not traded recently. Practise near the ATM strikes, where prices are most reliable.
Try it on real data. Open the free simulator, pick a past date and expiry, and trade the option chain with virtual money.