How to Read an Option Chain

The chain is organized by deadline. Near-dated options are cheaper and die fast; far-dated ones cost more and give the idea time to work. Choosing the expiration is choosing how long your thesis has to be right — decide that before you look at anything else.

Strike prices stack in a column, usually with calls on one side and puts on the other. The strike nearest the current stock price is the center of gravity — everything above and below it gets cheaper as it gets further from where the stock trades today.

The bid is what buyers are offering; the ask is what sellers want. You'll generally buy near the ask and sell near the bid, and the gap between them — the spread — is a real cost you pay both entering and exiting. A wide gap on a sleepy option can quietly eat more than your commission ever will.

Volume is today's contracts traded; open interest is contracts alive from before. Together they tell you whether an option is a busy marketplace or a ghost town. Trade the busy ones — ghost towns have wide spreads and no one to sell to when you want out.

Greeks columns, implied volatility, theoretical values — all real, all covered later in this unit. On day one you need five things: expiration, strike, bid, ask, and whether anyone's trading it. That's a full read of the menu.