The Options Chain Sheet | Options Basics

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The Options Chain Sheet

by John Jagerson

Options are most frequently quoted in a list format called a “chain sheet.” Each chain sheet has several components and although they are not complicated but it would be helpful to walk through each section so you understand what to look for when evaluating an option trade.


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In this article, we will be using a typical chain sheet for the stock Microsoft Corp (MSFT) for demonstration. Keep in mind that every online broker uses a slightly different version of a chain sheet. However, they are similar enough that it is usually not a challenge for a trader to shift from one version to another.

Each element of the chain sheet are described below. The numbers reference each element’s position on the image below.

Calls and puts (1)
Chain sheets are arranged with calls on the left hand side of the list of options and puts on the right hand side. In some chain sheet versions, the calls and puts are in a single list but the format below is more common.

Strike prices (2)
The available strike prices are listed down the center of the chain sheet. There is a call and a put contract that correspond to each strike price. If you need some help understanding what a call or put is, click here first.

Bid and ask (3)
Each call and put at every strike price has a listed bid (sell price) and ask (buy price). These prices are quoted per share, which means that you need to multiply it by the number of shares per contract, or 100. That will tell you how much a single contract will cost to buy, or is worth to sell.

Open interest (4)
The number of contracts of a call or put at a specific strike price currently held by other investors.

Volume (5)
The number of contracts of a call or put at a specific strike price bought and sold today.

Extra info (6)
Depending on your broker, there may be several other columns for each option contract. This extra information may include last trade price, implied volatility or some of the option Greeks. The most critical information, however, is contained in items 1-5 of the chain sheet.

Comments

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Vern - Thanks

|2009-05-06 03:50:36

Appreciate the efforts to bring this wealth of information to the public at no
cost (rather than free--no thing is free; some things are given at no
cost).

I trust that you benefit from your exertions in as positive a way as
much as we do.

Thanks again.

Vern

Irene

|2009-05-06 07:33:29

The information is very informative. Thanks you

nyres - question about the spread

|2009-08-15 07:08:53

Wouldn't the efficiency of the spread be a function of percentage of option
price rather than absolute number? In the chain sheet in the video some of the
way in the money calls seem to have a lower spread in the bid and ask (as a
percentage of total contract price) than the calls at the money.

Not asking
to be a smart-alec, these course's are really great, couldn't do it without the
video. Appreciate your whole attitude and quality efforts.

jd

John Jagerson - Spread question

|2009-08-15 13:04:53

JD,

I think you make a good point. I think that I would agree with you to a
certain extent that the spread as a function of the total cost of the option is
a major factor when deciding whether the spread will hurt your trade or not.

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