How to Read an Option Chain

Introduction

Open any broker's option chain for the first time and it looks like a wall of numbers. But once you know what each column means, the option chain becomes one of the most useful sentiment tools you have. Here's how to read it — without the jargon.

The layout

An option chain is a table centred on the current spot price:

• Calls (CE) sit on the left, Puts (PE) on the right.
• The strike prices run down the middle.
• The row nearest the current index level is the At-The-Money (ATM) strike.

Reading around the ATM strike

Everything above ATM on the call side is out-of-the-money; everything below is in-the-money (and mirror-image for puts).

The columns that matter

Five columns carry most of the information:

• LTP (Last Traded Price) — the current premium of that option.
• Open Interest (OI) — the total number of outstanding contracts at that strike. Think of it as how much money is parked there.
• Change in OI — whether positions were added or unwound today. This is often more telling than OI itself.
• IV (Implied Volatility) — the market's expectation of future movement, baked into the premium. Higher IV = pricier options.
• Volume — how many contracts traded today (activity, not commitment).

Reading sentiment from Open Interest

This is where the option chain earns its keep:

• High Put OI at a strike often acts as support — put writers are betting the index won't fall below it.
• High Call OI at a strike often acts as resistance — call writers are betting the index won't rise above it.
• The strikes with the highest OI on each side frame the range the market is currently pricing in.

An example range

For example, if NIFTY is at 24,400 with huge Put OI at 24,000 and huge Call OI at 24,800, the market is roughly saying: “we expect to stay between 24,000 and 24,800.”

The PCR shortcut

The Put-Call Ratio (PCR) = total Put OI ÷ total Call OI.

• PCR above 1 means more puts than calls — often read as bullish (a lot of downside is already hedged).
• PCR below 0.7 can signal excess optimism.

One input, not a crystal ball

Treat the PCR as one input, not a crystal ball.

A word of caution

Open interest shows where positions are, not what will happen. Big players roll and adjust constantly, and levels that look like support can break on real news. The option chain is a map of expectations, not a guarantee.

Practise reading it live

The best way to learn the option chain is to watch it move alongside price. MXTPP Trade Pilot gives you a full NIFTY/BANKNIFTY/SENSEX option chain with live OI and IV — and lets you place practice trades against what you see, with zero real-money risk. Start your free trial and read the chain like a pro.