The first time you open an option chain, it looks like a wall of numbers. Rows and rows of figures in green and red, columns with short names like OI, LTP, IV. Most beginners take one look, feel stupid, and close it. You are not stupid. Nobody explained it. Let's do that now, slowly, assuming you know nothing at all.
By the end you'll be able to open the Nifty option chain on the NSE website or your broker app and actually understand what you are looking at.
What an option chain even is
An option chain is just one screen that lists every option you can buy or sell on something, like Nifty or Bank Nifty, all in one place. Remember there are only two kinds of options: a call, which is a bet up, and a put, which is a bet down. And each one is available at many different price levels, called strikes. The option chain is simply the full menu: every strike, with its call on one side and its put on the other.
That is it. It is a menu. A long one, but just a menu.
The layout: calls on the left, puts on the right
Every option chain is built the same way, so once you learn it one time, you can read any of them.
Down the middle runs a single column of numbers going up in steps: 21,800, then 21,900, then 22,000, then 22,100, and so on. These are the strike prices, the price levels you are allowed to bet on.
Everything to the LEFT of that middle column is the call side, the up bets. Everything to the RIGHT is the put side, the down bets. Same strikes, calls on one side, puts on the other. The whole chain is a mirror with the strikes sitting in the middle.
The columns that actually matter
Each side has several columns. As a beginner you only need to understand four. Ignore the rest for now, they will not help you yet.
LTP (the premium). LTP means "last traded price." It is simply the premium, the price you would pay right now to buy that option. If the Nifty 22,000 call shows an LTP of 120, that option costs ₹120 per unit. One Nifty lot is 75 units, so ₹120 × 75 = ₹9,000 to buy one lot. This is the number that actually leaves your account.
OI (open interest). OI is how many of that exact contract are currently live in the market, held by everyone, not yet closed. Think of it as the size of the crowd standing at that strike. A big OI means a lot of people have a position there. It does not tell you which way the price will go. It only tells you where the crowd is.
Volume. Volume is how many of that contract were traded today. If OI is the crowd standing at a strike, volume is the foot traffic that came through today. High volume means that strike is busy and easy to get in and out of.
IV (implied volatility). IV is the market's guess of how jumpy things will be. You do not need the math. Just know this: higher IV means options cost more, because a bigger expected swing makes the "maybe" worth more. We explain IV in plain English here.
Now read it with one real example
Say Nifty is sitting at 22,000 right now. Look at the chain.
The 22,000 strike is the one closest to where Nifty actually is. That row is called at-the-money (ATM). The 22,000 call might show a premium of ₹120, and the 22,000 put about ₹80.
Now look at a call far below the current price, say the 21,800 call. It is deeper in-the-money and costs more, maybe ₹250, because it already has real worth baked in. Then look at a call far above, say 22,300. It is out-of-the-money and cheap, maybe ₹40, because it is almost all "maybe." The put side works the same way, just mirrored. That split between real worth and maybe is the premium, explained here.
That is genuinely most of what reading a chain is: find where the price is, then see how the premiums change as you move up and down the strikes.
OI and PCR: useful, not a crystal ball
Here is where almost every other guide oversells, and where beginners get burned.
You will hear that the strike with the highest call OI is a "resistance wall," and the highest put OI is a "support wall," and that price will bounce off them. People also quote the Put-Call Ratio (PCR), which is total put OI divided by total call OI, as a mood meter: above 1 is called bullish, below 1 bearish.
These are real signals, but they are weak and they break all the time. OI can be old and stale. A big OI number can be hedgers protecting other positions, not people betting on direction. "Walls" get smashed straight through on any news day. Treating the chain like it predicts the future is exactly how confident beginners lose money fast. Use OI to see where the crowd is, not to be told where the price must go.
Where the chain quietly trips up buyers
The chain does not just inform you. It tempts you. The cheap, far-out options sit right there looking affordable, and that ₹40 number whispers "low risk, more lots for my money." It is not low risk. It is the option least likely to ever pay, because it is almost all time value that melts a little every single day, called theta.
The chain also feeds chasing. You watch a call's premium ticking up live and you buy it because it is moving, paying up after the move already happened. That is FOMO, and the live chain makes it very easy. Reading the chain well only helps if your behaviour does not undo it. Those behaviour patterns show up in your own tradebook.
One more layer: ITM, ATM, OTM
You saw those words above. In one line: a strike near the current price is at-the-money (ATM), one that already has real worth is in-the-money (ITM), and one that is pure "maybe" is out-of-the-money (OTM). Which one you pick decides your odds far more than most beginners realise. Moneyness gets its own guide next.
The one thing to remember
An option chain is a menu, not a fortune-teller. Calls on the left, puts on the right, strikes in the middle, and four columns that matter: premium, OI, volume, IV. Learn to read where the price is and how the premiums change around it, use OI to locate the crowd rather than predict it, and do not let the cheap far-out numbers seduce you. The chain shows you the field. What you do on it is still up to you.
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