How to Read an Option Chain: OI, IV and Strikes in Plain English
Every expiry Tuesday, business channels read the NIFTY option chain aloud like a weather forecast: one strike is a wall, another is a floor, the put–call ratio says the mood has turned. The chain itself makes no such claims. It is a free public table on NSE’s website listing prices and outstanding positions for every option contract on one underlying — nothing more and, read carefully, nothing less.
This guide explains how to read option chain data column by column: what the strikes mean, what is OI in an option chain and how it differs from volume, what IV measures, and what the put–call ratio does and does not summarise. If calls and puts are themselves new, start with what options trading means and return.
Research date: the exchange facts on this page — expiry days, lot sizes, the ban list — are taken from exchange files of 17–18 August 2026. The worked chain later in the article is constructed for teaching and is not a live quote.
One table, one underlying, one expiry
An option chain shows every listed option on a single underlying for a single expiry. Strike prices run down the middle of the table. Everything to the left of the strike column describes call options; everything to the right describes puts — one row per strike. A dropdown at the top switches the entire table to a different expiry.
NSE publishes a chain for each of its F&O underlyings — currently 208 stocks and 6 indices, tracked on the futures and options hub. Index options trade in weekly and monthly expiries; since the expiry-day standardisation of September 2025, NSE index contracts expire on Tuesday and BSE’s on Thursday, and the next NIFTY expiry is 18 August 2026. Stock options are monthly only, expiring on the last Tuesday of the month — next on 29 September 2026. The expiry calendar keeps these dates current, including holiday shifts.
The geometry: ATM, ITM and OTM
Three labels orient everything else on the page:
- At the money (ATM): the strike closest to the current spot price.
- In the money (ITM): for calls, strikes below spot — the right to buy cheaper than the market already has value. For puts it is mirrored: strikes above spot.
- Out of the money (OTM): everything else. The premium here is entirely time value.
NSE shades the ITM half of each side in pale yellow, so the two shaded regions sit on opposite sides of the at-the-money row. That shading boundary is the fastest way to locate ATM at a glance.
What ITM means at expiry depends on the underlying. Index options are European style and cash settled: an ITM finish is credited as cash intrinsic value on T+1, and no shares move. Stock options, under SEBI’s physical-settlement mandate (fully in force from October 2019), are compulsorily settled by delivery of shares if ITM, with delivery margins ramping through expiry week to roughly full contract value. OTM options on both simply expire worthless. The rulebook is covered in SEBI’s rules for options trading.
The columns, briefly
Both the call side and the put side carry the same set of columns:
| Column | What it shows |
|---|---|
| OI (open interest) | Contracts still open at that strike |
| Chng in OI | Net change in open interest during the session |
| Volume | Contracts traded today; resets to zero each morning |
| IV | Implied volatility backed out of the current premium |
| LTP | Last traded price of the option — the premium |
| Net Chng | Change in LTP versus the previous close |
| Bid qty / Bid price | Best visible buy order and its size |
| Ask price / Ask qty | Best visible sell order and its size |
The bid–ask columns matter more than beginners expect: in far OTM strikes the spread can be a large fraction of the premium, making the LTP a stale reference.
What is OI in an option chain?
Open interest is the number of contracts currently outstanding at a strike. Every open contract has exactly one buyer and one seller and is counted once, not twice. Volume, by contrast, counts contracts traded during the day and resets to zero at the next open; OI carries overnight until positions are closed or expire.
The two numbers move in fixed combinations:
| What happened in a trade | Volume | Open interest |
|---|---|---|
| A new buyer meets a new seller | Rises | Rises |
| A buyer closing out meets a seller closing out | Rises | Falls |
| An existing position passes to a fresh participant | Rises | Unchanged |
“Chng in OI” is the day’s net result of all three. The combination worth internalising: heavy volume with flat OI means positions changed hands — churn — not that new positioning was built.
Units matter. NSE displays OI in contracts. To express it in underlying units, multiply by the lot size: NIFTY’s lot is currently 65, so 10,000 contracts of open interest represent 6.5 lakh units of NIFTY exposure. The other index lots are BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTY NEXT 50 25; stock lots vary widely and are listed on the F&O stock list and lot sizes page.
Open interest also has regulatory teeth. Each F&O stock has a market-wide position limit (MWPL) — since October 2025, the lower of 15% of free float or 65 times average daily delivery value, monitored intraday on a delta-adjusted futures-equivalent basis. When OI crosses 95% of MWPL the stock enters the F&O ban period, exiting only when OI falls below 80%; during a ban only position-reducing trades are allowed, and switching sides is prohibited. On 18 August 2026 four securities were in the ban: BANDHANBNK, LICI, MANAPPURAM and SAIL. The live ban list is updated daily.
What is IV in an option chain?
The premium is the observed market price of an option. Implied volatility is the volatility number that makes a standard option-pricing model produce exactly that price. It is backed out of the premium, not fed in — which is why it is called implied.
Read IV as an annualised percentage of expected movement priced into the option. A rough descriptive conversion: dividing by about 16 (the square root of 252 trading days) gives the one-day movement the premium implies, so an IV of 12 corresponds to roughly 0.75% a day. Higher IV means costlier premiums on both calls and puts, because both become more valuable when larger moves are considered likely.
Two things IV is not. It is not a forecast that the underlying will move — it is what buyers and sellers are currently paying as if it might. And it is not one number per expiry: IV differs strike to strike on the same chain, typically rising for lower strikes on index options, a pattern called skew, visible in the worked chain below. India VIX is the same idea computed at index level from NIFTY option prices.
Because IV and premium are two views of one price, the options calculator lets you move between them in either direction. How sensitive a premium is to IV changes is the greek vega, covered in option greeks explained.
Max-OI strikes: positioning, described
Scan the OI column on each side and two strikes stand out: the one carrying the largest call OI and the one carrying the largest put OI. Most market commentary immediately renames them “resistance” and “support”. This page does not, and the reason is factual, not stylistic.
Open interest counts contracts. It cannot distinguish buyers from sellers, or a hedge from a directional bet. A large OI figure at one strike says many contracts sit open there; it does not say who holds which side, why, or what they will do next. So “the 25,000 call holds the chain’s largest OI at 91,600 contracts” is a statement of record, while “25,000 should act as a ceiling” is a prediction the data does not license. Option chain analysis, done honestly, stops at the first sentence.
The put–call ratio, computed
The put–call ratio (PCR) is total put OI divided by total call OI for an expiry. A volume-based variant — puts traded divided by calls traded — also circulates, so check which one a source is quoting before comparing numbers.
Folk interpretations attach thresholds to PCR: above 1 is called bullish by contrarians and bearish by others, which is a hint about how much predictive standing the thresholds have. The ratio is a one-number summary of positioning across the whole chain, with the same limitation as any OI figure — it counts contracts without revealing intent. The arithmetic is shown on real totals below.
A worked read-through
The table is a compact NIFTY weekly chain, constructed to illustrate the reading sequence — these are not live NSE quotes. Assume spot at 24,960. Real chains list far more strikes at finer intervals; six rows are enough to practise on. OI is in contracts; lot size 65.
| Strike | Call OI | Call IV | Call LTP | Put LTP | Put IV | Put OI |
|---|---|---|---|---|---|---|
| 24,700 | 21,400 | 11.8 | 310 | 42 | 13.9 | 68,200 |
| 24,800 | 34,800 | 11.5 | 228 | 62 | 13.1 | 74,500 |
| 24,900 | 52,300 | 11.2 | 158 | 96 | 12.4 | 61,900 |
| 25,000 | 91,600 | 10.9 | 101 | 148 | 11.8 | 55,400 |
| 25,100 | 78,200 | 10.7 | 58 | 205 | 11.3 | 30,700 |
| 25,200 | 64,900 | 10.8 | 31 | 275 | 11.0 | 18,100 |
Read it in sequence:
- Locate spot and ATM. Spot 24,960 sits between 24,900 and 25,000; 25,000 is the nearest strike, so it is ATM. Calls at 24,700–24,900 are ITM; puts at 25,000 and above are ITM.
- Read one call row aloud. The 24,900 call last traded at ₹158: ₹60 of intrinsic value, ₹98 of time value. Its OI of 52,300 contracts equals about 34 lakh units of NIFTY (52,300 × 65). Its IV is 11.2.
- Read one OTM put row. The 24,800 put trades at ₹62 — all time value — with 74,500 contracts open at IV 13.1.
- State the max-OI strikes. The 25,000 call holds the chain’s largest call OI at 91,600 contracts; the 24,800 put holds the largest put OI at 74,500. That is the full extent of what the numbers say.
- Compute PCR. Total put OI is 308,800; total call OI is 343,200. PCR = 308,800 ÷ 343,200 ≈ 0.90.
- See the skew. Put IV rises steadily as strikes fall — 11.0 at 25,200 up to 13.9 at 24,700. Protection below the market is priced at higher implied volatility than strikes near it.
One cost detail belongs in any chain walkthrough. Since 1 April 2026, selling an option costs STT of 0.15% of the premium, but an ITM option carried to expiry and auto-exercised attracts STT of 0.15% of its intrinsic value — a far larger rupee amount, which can consume much of a small ITM option’s payoff. The full cost stack is worked through in tax on F&O trading.
Why this is a reading skill, not an edge
SEBI’s September 2024 study of individual equity F&O traders found that 93% of them lost money over FY22–FY24, with aggregate losses of about ₹1.81 lakh crore across the three years and an average net loss of around ₹2 lakh per trader; losses were concentrated among the most active traders. SEBI’s subsequent FY25 update put the loss-making share at roughly 91%.
Those are the base rates among people looking at the same public table described on this page. Chain literacy is worth having for the same reason balance-sheet literacy is — it lets you understand what a public document says and refuse claims it does not support. It is not a trading edge, and nothing above turns a table of positions into a forecast.
Where to go next
Gale is building end-of-day chain pages for individual underlyings — Bank Nifty, Reliance, TCS, Infosys and the rest of the F&O list — reporting max-OI strikes and PCR in the same descriptive register used here. Until they go live, the F&O hub indexes everything in this section, and NSE’s own site remains the source for live chains. Readers newer to markets may want how to start investing in the Indian share market first, the stock market terminology glossary as a desk reference, and the technical analysis guide for the price-chart half of the screen.
FAQ
What is OI in an option chain?
Open interest is the number of option contracts currently outstanding at a strike — each with one buyer and one seller, counted once. Unlike volume, which resets daily, OI carries overnight until positions close or expire. NSE displays it in contracts; multiply by lot size for units.
What is IV in an option chain?
Implied volatility is the annualised volatility figure that makes an option-pricing model reproduce the option’s current market premium. It is derived from the price, so it reflects what the market is paying for movement, not a forecast that movement will occur. Higher IV means costlier calls and puts.
What is a good PCR?
There is no threshold with predictive standing. PCR is total put open interest divided by total call open interest — a summary of positioning, not a signal. Interpretations of the same reading conflict even among people who use it, and OI cannot reveal whether positions are hedges or directional bets.
How to read option chain data for the first time?
Locate the spot price and the ATM strike, then read one row completely: premium, intrinsic versus time value, OI in contracts and units, and IV. Only after single rows make sense do chain-wide numbers like max-OI strikes and PCR mean anything.
Is the option chain free to access?
Yes. NSE publishes live chains for all 208 F&O stocks and 6 indices on its website at no cost, with an expiry dropdown for every listed contract.
What to weigh before using an option chain
The chain rewards a reader who respects its limits. It shows the price of every listed right and obligation on an underlying, the volatility implied by those prices, and where open positions sit — a genuinely useful description of the present. It is silent on direction, on who holds which side, and on tomorrow. Weigh the SEBI base rates before treating any of it as an edge; weigh the settlement and STT mechanics before letting a small ITM position drift into expiry; and weigh whether a level quoted to you as support or resistance is anything more than an open-interest count wearing a costume. The table is public. So is the discipline of reading only what it says.
Gale.in is not a SEBI-registered investment adviser or research analyst; this article is education, not investment advice.