Beginners Guide: How to Read an Options Table

A friend of mine educated me on the basics of options at a very small New Year’s eve party at the end of 1998.  I’ve been hooked since then.  He was a certified financial planner and was able to explain how options worked with little pain.  Maybe it was the single malt scotch he was serving, but it seemed so easy that I didn’t know why everyone wasn’t doing it.  A couple of days later I jumped on my computer to see what my next trade would be with options.  I pulled up the link that said “options” and sat there motionless while I stared at the screen in complete confusion.  I understood the very basic concepts of options (somewhat) and yet had no clue of how to read an options table.  Throw in the fact that my account wasn’t approved for options trading I had some decent hurdles to get over before I could trade.  Eventually I got there and now I can hopefully save other people some time on the learning curve of figuring out how to read an options table. 

Before getting to the chart, these are high level basic definitions of some options terminology.

  • Buying a call gives you the option to purchase the underlying stock at the strike price before expiration.
  • Selling a call obligates you sell the stock at the strike price before expiraton.
  • Buying a put gives you the option to sell the underlying stock at the strike price before expiration.
  • Selling a put obligates you to buy the stock at the strike price before expiration.
  • The strike price is the buy and sell price of the underlying stock if the price of the stock finishes in-the-money. 
  • A contract is one option which is represents a 100 share block of the underlying stock. 
  • Expiration is the set period when each month’s options close.  Expiration is always the Saturday after the third Friday of the month.  It’s easier just to think of the last trading day for options is third Friday every month.

Putting it all together:

If I sold one put contract I am obligated to buy 100 shares of the stock if the stock is below the strike at expiration.  If I bought one put contract I have the option of selling 100 shares at the strike price.  I would only do this if the stock’s price is below the strike since I could sell the shares on the open market for more if the stock was trading above the strike.

If I sold one call contract I am obligated to sell 100 shares of the stock if the stock is above the strike at expiration.  If I bought one call contract I have the option of buying 100 shares at the strike price.  I would only do this if the stock’s price is above the strike since I could buy the shares on the open market for less if the stock was trading below the strike.

The chart below shows Alcoa’s (AA) option table for October expiration as of noon nearly four weeks away. 

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

Alcoa (AA) October Expiration

Current price: 37.84

Today’s Change:+0.84

Calls

Strike

Puts

Symbol

Last

Change

Bid

Ask

Volume

Open Int

Price

Symbol

Last

Change

Bid

Ask

Volume

Open Int

AAJZ.X

5.5

+0.8

5.6

5.8

81

4,017

32.5

AAVZ.X

0.2

-0.1

0.15

0.2

105

38,269

AAJG.X

3.4

+0.75

3.3

3.5

811

49,265

35

AAVG.X

0.4

-0.25

0.4

0.45

379

34,895

AAJU.X

1.7

+0.4

1.65

1.75

896

27,825

37.5

AAVU.X

1.25

-0.45

1.2

1.25

306

21,776

AAJH.X

0.8

+0.2

0.75

0.8

1,598

74,155

40

AAVH.X

2.8

-0.6

2.7

2.85

28

34,401

AAJV.X

0.3

+0.05

0.25

0.35

502

40,177

42.5

AAVV.X

5

-0.8

4.7

4.9

59

6,761

AAJI.X

0.2

0

0.1

0.15

316

35,258

45

AAVI.X

7.4

-0.7

7

7.3

22

5,724

 

  • Column H is the strike price.  This is the price a trader will be buying or selling the stock if the option makes it all the way to expiration.  All columns to the left are for calls and all columns to the right are for puts. 
  • Columns A and I are the symbols for each option.  You actually have no need to learn how to read these symbols as a beginner.  There is a method for the madness of their look, but forget that for now. 
  • Columns B and J are the last prices paid for each option
  • Columns C and K show the changes in the price for the day.  I pulled this chart two and a half hours into the day to show how much option prices can swing in a short period of time creating large percentage gains or losses.
  • Columns D, E, L and M are the bid and ask for both the calls and puts respectfully.  These are just like stocks’ bid and ask prices.  The bid is how much someone is willing to pay and the ask is how much someone is willing to sell.
  • Columns F and N are the volume for the day for each option.
  • Columns G and O are the open interest in each option.  Open interest shows how many open option contracts are outstanding right now.  The total number of transactions of this option may be higher than the current open interest, but this breaks it down to show how many have not been closed yet since not all options make it to the last day of trading before expiration.  Many traders will close their options before expiration to limit losses or take profits early.

If you are not reading this post on www.mytradersjournal.com you are reading it from a site that has plagiarized it.  I’ve had to add this notice to the end of every post with the growing number of scum out there who steal posts and don’t credit the authors.

For further reading on how put selling works, read my post here.

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