An option chain is a chart with detailed information of all option contracts available for Nifty stocks. At first, traders might feel overwhelmed by options. But after they understand how to read option chain data, they have access to more information and can make better decisions within the market.
Published on 21 January 2023
In simple words, an option chain is the listing of all option trading contracts. It comprises puts as well as calls for a particular security. Another term used to describe the listing is Option Matrix. It is very useful for trading on the next day.
A skilled trader can use the option chain to understand the direction in which the price is moving. Besides, it helps in the identification of points where a low or high level of liquidity is seen. It also allows traders to analyze the depth and liquidity of particular strike prices.
Now that what is Option chain is clear to you, here’s a look at its various components.
If traders know how to read options chains in NSE, they can easily make important trading decisions. Here’s how it helps:
Once you learn how to read option chain data, you can make better decisions on whether to buy a put option or a call option. You can decide the strike price and other details as well. For a trader, option chain data can help to differentiate between a profitable or a loss-making trade.