How to Read an NSE Option Chain: OI, Change in OI, IV, and the Strike Ladder

An option chain is a table listing all the option contracts available on an underlying — an index such as NIFTY 50 or an individual stock — for a chosen expiry date. NSE publishes option chains on its website, and most broker platforms show their own version. The first time you open one, it looks overwhelming. This article explains how to read it column by column, what each number actually measures, and the common ways people misread it.

The layout: calls on one side, puts on the other

The centre column of an option chain is the strike price ladder: a list of strike prices, usually at fixed intervals around the current price of the underlying. Calls are shown on one side of the strike column and puts on the other. Each row therefore shows the call and the put for the same strike and expiry side by side.

At the top, you choose the underlying and the expiry date. The current price of the underlying is shown too. Strikes near that price are called at the money. Many platforms shade the in-the-money options — calls with strikes below the current price and puts with strikes above it — to make the layout easier to scan.

Last traded price and net change

LTP is the price at which that option contract last traded, which is the premium per unit of the underlying. Net change shows how much that premium has moved from the previous close. Remember that an option's price is quoted per unit; the amount you would actually pay for one contract is the premium multiplied by the lot size.

For example, if a call's LTP is ₹120 and the lot size is a hypothetical 50 units, one contract costs ₹6,000 in premium, before charges. Lot sizes are set by the exchange for each underlying and are revised from time to time, so check the current figure on NSE before doing this arithmetic for a real contract.

Bid and ask

The bid is the highest price a buyer is currently willing to pay, and the ask is the lowest price a seller is willing to accept, along with the quantities at those prices. The difference is the spread. Near-the-money options on major indices usually have narrow spreads. Far-out-of-the-money strikes and stock options with little activity can have wide spreads, which means you lose more just by entering and exiting a position.

Volume

Volume is the number of contracts traded in that option during the current session. It tells you how actively a strike is being traded today. High volume generally means it is easier to buy or sell without moving the price much.

Open interest: contracts still open

Open interest, or OI, is the total number of contracts that remain open — created but not yet closed out or settled. It is different from volume. If one trader buys a new contract from another trader who is also opening a new position, OI rises by one. If a trader who already holds a contract sells it to someone who is closing an existing short position, OI falls. If one new participant replaces an existing one, volume increases but OI does not change.

OI is reported at the end of the previous session and updated during the day on most platforms. High OI at a strike means many contracts are outstanding there. It does not tell you whether buyers or sellers initiated those positions — every open contract has both a holder and a writer.

Change in OI

Change in OI shows how much open interest at each strike has increased or decreased during the current session. A large increase means many new positions were opened at that strike today; a large decrease means many were closed. Traders often read this alongside price change. For example, rising price with rising OI is commonly described as new long positions being added, while falling price with rising OI is described as new short positions. These are conventional descriptions, not certainties — because each contract has two sides, the same data can be interpreted in more than one way.

Implied volatility

Implied volatility, or IV, is the volatility figure that makes an option pricing model produce the option's current market price. It is not a forecast in the usual sense; it is what the market is effectively pricing in. Higher IV means more expensive options for the same strike and expiry.

IV often differs across strikes. Plotting IV against strike frequently shows a smile or skew, with out-of-the-money puts carrying higher IV than at-the-money options. This reflects demand for protection against sharp falls. IV also tends to rise before major scheduled events such as results or policy decisions and to fall afterwards — a pattern often called a volatility crush.

Put-call ratio and other summary numbers

Many platforms show a put-call ratio, usually the total put OI divided by the total call OI for an expiry. Some traders read high or low values as sentiment indicators. Others compute measures such as max pain, the strike at which option holders in aggregate would lose the most at expiry. Treat these as descriptive statistics rather than forecasts. They summarise how positions are distributed today and can change quickly, and there is no reliable rule that turns them into a prediction.

Reading the chain without over-reading it

• Start by choosing the expiry you care about; near-term and longer-term expiries can look very different.
• Locate the at-the-money strike and look at premiums on both sides to see how much the market is charging for protection and for upside exposure.
• Compare IV across strikes and expiries to see where options are relatively expensive.
• Look at where OI is concentrated, while remembering that OI alone does not reveal who is long and who is short.
• Check bid-ask spreads and volume before assuming you can trade a strike at its LTP.

Common mistakes

The most common mistake is treating the option chain as a signal generator — assuming, for instance, that the strike with the highest call OI is a ceiling the market cannot cross. Positions can be adjusted within minutes, and large moves often happen precisely when many participants are positioned the other way. Another mistake is ignoring lot size and leverage: a small premium per unit can still mean a large rupee exposure per contract.

Used well, the option chain is a detailed picture of how options on an underlying are priced and where activity sits. To see how the Greeks behind those prices change with the underlying, try our Option Greeks calculator, which shows Delta and Gamma across a range of prices for any strike you choose.