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Option Chains made Easy

Option chains or option matrices are a matrix or a single document that includes information about the call and put option prices, strike prices, and other details related to single underlying asset within a given maturity period. <br>This presentation will give you a good understanding about option chains(https://www.edelweiss.in/market/nse-option-chain).

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Option Chains made Easy

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  1. Option chains made easy

  2. Introduction Options are one of the financial derivatives that represent a contract sold between two parties. Option contracts allow the buyer the right to, but does not obligate to, buy or sell the security. The contract includes the agreed-upon price for a specific time frame, known as the expiration date. Option chains or option matrices are a matrix or a single document that includes information about the call and put option prices, strike prices, and other details related to single underlying asset within a given maturity period. An option chain is a very straight-forward and clear form of presenting the information for retail investors. Option chain provides all the prices in an easy-to-understand sequence. Traders can find option premium based on the expiration date and strike prices. We will go through the terms involved in understanding and option chain in a while.

  3. Terms you need to understand Option chain presents crucial data for the two important contracts that take place in options trading. The CALLS represents the calls option and PUT presents put options in the option chains. The strike price is standing between the CALLS and PUTS information on the option chain. 1.The strike price is the agreed-upon price by the two parties for buying and selling. 2.Open interest or OI column represents the number of positions available for trading at a given strike price. It stands for both buying and selling in the chain. 3.The volume column in the option chain helps you understand the number of options traded on that particular day or for the specific expiration date. 4.Implied Volatility or IV column helps in predicting the movement of the security’s prices. 5.Last Traded Value or LTP column gives you the last traded price of the stock. 6.Bid Quantity column represents the number of buy quantities in the system. We can say it is the demand of the securities at the given strike price. 7.Bid Price is the price at which the buyer is willing to buy or sell the options contract. 8.Ask price column gives information about the rate at which the options contract are available for purchase. 9.Ask Quantity represents the contracts that can be purchased for the given strike price.

  4. Different types of option chains • There are two types of options in option chain: call option and put option. A call option provides a right to purchase the given security at a pre-decided price in a given time frame. A put option provides a right to sell the given security at a pre-decided price in a given time frame. The call and put methods provide further choices. There are In the Money call option and Out of the Money Call option. When the Current market price is higher than the Strike Price, we say it is In the Money call option. When the Strike Price is higher than Current Market Price, we say it is Out of the Money call option. When the Strike Price is higher than the Current Market Price, we say it is In the Money Put Option. When the Strike Price is smaller than the Current Market Price, we say it is Out of the Money Put Option.

  5. THANK YOU

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