Traditionally, calls are listed on the left side of the option chain, and puts are on the right. Put and call : When viewing an option chain, the prices of call options and put options will be listed separately.Strike : Strike, or strike price, or exercise price, is the price the seller is obligated to buy (in the case of a put option) or sell (in the case of a call option ) at anytime through an option’s expiration date.Last price: The last price is the most recently posted trade on an option.Volume : Volume tells you how many contracts of a particular option were traded during the most recent trading session.An options OPRA code can look a bit cryptic, but it essentially combines all of the pertinent information for the option into one long symbol for the option. OPRA stands for the Options Price Reporting Authority. Symbol : Every option has a symbol, just like its underlying stock.Thus, there should be a higher likelihood your order will be filled at a price that’s acceptable to you.A good place to start is familiarizing yourself with the meanings of certain labels on columns you will see in an option chain: Option and how much someone wants to sell it for. So there will be less of a price discrepancy between what someone wants to pay for an The main benefit of trading options with high open interest is that it tends to reflect greater liquidity for that contract. So open interest doesn’t necessarily indicate a bullish or bearish forecast. After all, for every option buyer expecting one result, there’s an option seller expecting something else to happen. However, high open interest doesn’t necessarily mean the people trading that contract have the correct forecast High open interest for a given option contract means a lot of people are interested in that option. For the rest of the trading day the figure remains static.Īs you can see from figure 1, open interest can vary from the call side to the put side, and from strike price to strike price. Instead, it is officially posted by The OCC the morning after any given trading session, once the figures have been calculated. This brings up a point worth noting: although you can keep track of trading volume on any given option throughout the day, open interest is a lagging number: it's not updated during the course of a trading day. Keep in mind that each option contract normally represents 100 shares of the stock. Here’s an example of trading volume and open interest figures for fictitious stock XYZ. Conversely, if more option trades are marked “to close” than “to open”, open interest decreases. Obviously, if more of the volume on any given option is marked “to open” than “to close”, open interest increases. Option type (call or put) at a specific strike price with a specific expiration. They can be tallied on as large a scale as all open contracts on a stock, or can be measured more specifically as Simply put, open interest is the number of option contracts that exist for a particular stock. And once they’ve tallied up the numbers, they canĭetermine something called “open interest”. That’s where The Options Clearing Corporation (OCC) comes in.Įvery day, The OCC looks at the volume of options traded on any given stock, and they make note of how many options were marked “to open” versus “to close”. Outstanding option contracts in the marketplace. Someone needs to look at the big picture and keep track of the overall number of In other words, options aren’t necessarily hot potatoes that get passed around and wind up in someone’s hands at expiration. You need to specify whether you are buying or selling “to open” or “to close” your position. To simply say “buy” or “sell” as you would with a stock. That’s why whenever you enter an option order, it’s not good enough Remember: whenever you trade an option contract, you might be creating a brand-new position (opening) or liquidating an existing one (closing). Keeping Tabs on Open Interest (Or Where Do Options Go When They Die?)Īs opposed to stocks, which have a fixed number of shares outstanding, there’s no minimum or maximum number of option contracts that can exist for any given underlying stock.
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