The chain is a map of expectations
An option chain lists, for one underlying and one expiry, every strike with its call on the left and put on the right. Beginners see a wall of numbers; professionals see where the market thinks price will and won't go, how much fear is priced in, and where the big positions sit. Here is the live NIFTY chain around the money, with the columns Finostat computes for you:
The columns
| Column | What it is | How to read it |
|---|---|---|
| LTP | Last traded price of that option. | The premium, per share. Multiply by lot for the rupee cost. |
| IV | Implied volatility: the annualised volatility the premium implies (Chapter 8). | Higher = market expects bigger moves = options are expensive. Compare across strikes and against India VIX. |
| Δ (delta) | How much the premium moves per 1-point move in the underlying (Chapter 7). | Also a rough probability of finishing ITM: a 0.25-delta call is priced as a ~25% shot. |
| OI | Open interest: contracts currently outstanding at that strike. | Big call OI above spot = a ceiling writers are defending. Big put OI below = a floor. |
| Volume | Contracts traded today. | Where the action is. High volume with rising OI = new positions; high volume with falling OI = unwinding. |
| Change in OI | Today's change. | Fresh call writing at a strike after a rally = resistance being built in real time. |
Support and resistance from open interest
Option writers are, on aggregate, the better-capitalised side. When a strike has a very large call OI, a lot of money is betting NIFTY will stay below it by expiry, and those writers will hedge and defend as price approaches. So the strike with the highest call OI above spot acts as resistance; the highest put OI below spot acts as support. This is not magic — it is where the most losses would occur if price broke through, so it is where the most effort goes into stopping it.
The corollary is max pain: the strike at which the total value of all open options is lowest at expiry — the price that hurts option buyers the most. Expiries have a documented tendency to drift toward it in the final hours. Treat it as a mild gravitational pull, not a target.
The put-call ratio (PCR)
PCR = total put OI ÷ total call OI. Above 1, more puts are open than calls — usually read as a hedged, somewhat fearful market; below 0.7, complacency. Its use is contrarian at extremes: a very high PCR often precedes a bounce (everyone is already hedged), a very low one precedes a dip. In the middle of its range it tells you almost nothing. Beginners quote it constantly; desks glance at it once a day.
Implied volatility across strikes
Look at the IV column top to bottom. It is not flat. Out-of-the-money puts (below spot) almost always carry higher IV than out-of-the-money calls: the market pays more for crash protection than for rally participation. That tilt is the skew, and its shape across all strikes is the smile. Chapter 8 goes deep; for now, just notice it in the live numbers.
A reading routine
- Find the ATM strike. Note the straddle (ATM call + ATM put): that is the market's expected move to expiry in points (Chapter 6).
- Find the highest call OI above and highest put OI below spot: the expected range's edges.
- Compare ATM IV to India VIX and to last week: are options cheap or rich today?
- Check the skew: is the market paying up for downside? That tells you what it fears.
- Only now form a view — and pick a strategy that is priced attractively for that view, not just one that “feels” right.
Next: the maths behind those premiums, kept honest and intuitive — option pricing and the expected move.