Option Chain Explained: How to Read Nifty & Bank Nifty Option Chains
An option chain looks scary because it’s a big table of numbers. Once you know what five of those numbers mean, it’s actually easy to read.
Open an option chain for the first time and it looks like someone gave you a giant spreadsheet with no explanation. Rows and rows of numbers, two matching sets of columns, everything changing colour every few seconds. Most people close the tab and never look again.
But here’s the truth: it isn’t actually complicated. It’s just full of numbers. Once you know what five or six of them mean, you can look at a Nifty or Bank Nifty option chain and understand, in plain terms, where a lot of traders are placing their bets, and where the market might find it hard to move past.
This guide explains it slowly, in everyday words. No trading experience needed.
What is an option chain?
Think of it like a betting table for where an index (like Nifty 50 or Bank Nifty) will be by a certain date. At every price level, people can place two kinds of bets:
- Call: a bet that the price will go above that level.
- Put: a bet that the price will go below that level.
An option chain simply lists every price level in a table, with all the “will go up” bets on the left and all the “will go down” bets on the right. The price levels run down the middle.
You can see this table live and for free on the NSE website, and inside most trading apps.
The numbers that actually matter
A full option chain has a dozen or so columns. You really only need to understand five of them.
The price level (Strike Price)
This is simply the level the bet is placed against. “Will Nifty go above 24,600?” — 24,600 is the price level. The chain lists many levels, both above and below today’s price, spaced at fixed gaps.
The price of the bet (LTP)
This is what it costs to place that bet right now, or what you’d get if you’re selling it. It moves up and down all day as people buy and sell.
How many bets are open (Open Interest)
This tells you how many of these bets, at this exact price level, are currently active, meaning placed but not yet closed. It doesn’t tell you if people think the price will go up or down. It just tells you how much attention and money is sitting at that level.
How many are new today (Change in OI)
This shows how much that number changed since yesterday. It matters more than the total, because it tells you where people are placing fresh bets today, not just where old bets have piled up over weeks.
How much movement is expected (Implied Volatility)
This is a number that shows how big a move the market expects, written as a percentage. A higher number means the market expects bigger swings soon, maybe because of a big announcement or company results coming up. It usually drops back down once the event has passed.
How much traded today (Volume)
This counts how many bets changed hands today at that price level. High trading with few bets left open usually means people are buying and selling the same day. A lot of bets sitting open with normal trading usually means people are holding on.
A simple example with Nifty
Say Nifty is trading around 24,500 today. You’d look at the 24,500 row on the chain, or the level closest to it. That’s the row people watch most closely, since it’s nearest to where the price actually is.
| Call bets open | Call, new today | Call price | Price level | Put price | Put, new today | Put bets open |
|---|---|---|---|---|---|---|
| 18 L | +1.2 L | 210 | 24,700 | 95 | +0.3 L | 9 L |
| 26 L | +3.8 L | 130 | 24,600 | 150 | +0.6 L | 12 L |
| 21 L | +0.9 L | 78 | 24,500 (today’s price) | 210 | +1.1 L | 15 L |
| 14 L | +0.4 L | 42 | 24,400 | 310 | +2.9 L | 24 L |
| 10 L | +0.2 L | 20 | 24,300 | 420 | +4.1 L | 31 L |
(These numbers are just an example to show the pattern. They aren’t real market data. Always check the live chain before deciding anything.)
In this example, the most “will go up” bets are sitting at 24,600, and the most “will go down” bets are sitting at 24,300. Put simply: a lot of people are betting the price will struggle to climb past 24,600, and a lot of people are betting it won’t fall much below 24,300. This isn’t a promise. It’s just where the crowd’s money currently sits, and that can change the very next day.
What about Bank Nifty?
Bank Nifty’s chain works exactly the same way. Two small differences:
- Bigger gaps between price levels, since Bank Nifty itself trades at a higher number than Nifty.
- Usually more jumpy. Bank Nifty tends to swing more sharply during the day, since it’s made up of only bank stocks. You’ll often see this show up as a higher “expected movement” number on its chain.
One more thing: the number of shares in one bet (called the lot size) gets changed by the exchange from time to time. Always check the current number on your broker’s app before you work out how much money a bet actually involves.
Two extra numbers people like to check
Put-Call Ratio (PCR)
This compares the total “will go down” bets to the total “will go up” bets. If there are more “will go down” bets overall, some traders read that as a good sign for the price (because a lot of those bets are often placed by people who expect the price to hold steady or rise). If there are more “will go up” bets, it can mean the opposite. It’s a mood gauge, not a forecast. It’s more useful watched over several days than read as a single number.
Max Pain
This is the one price level where the largest number of bets (both kinds put together) would end up worth nothing. Some traders watch it because the price sometimes drifts toward this level close to the settlement date. It’s something people have noticed happen sometimes, not a rule that always holds true.
How to actually read a chain, step by step
- Find today’s price level. Locate the row closest to where the index is trading right now. Start here.
- Look a few rows above and below. Where are the “will go up” bets piling up? Where are the “will go down” bets piling up?
- Check what’s new today, not just the total. A level with a big total but nothing new today tells a different story than one where bets are building up fast right now.
- Glance at the “expected movement” number. Is it higher than usual everywhere? That usually means people expect something big to happen soon.
- Treat it as a rough zone, not a prediction. It shows you where the crowd’s money is sitting. It doesn’t promise the price will actually stop there.
Mistakes beginners often make
- Thinking a busy price level is a fixed wall. It can change or disappear the very next day, especially close to the settlement date.
- Only looking at totals, not what’s new today. Old numbers matter less than fresh activity.
- Looking at the chain alone, and nothing else. The overall trend and the regular price chart still matter. The option chain adds extra context, it doesn’t replace them.
- Mixing up “how much movement is expected” with “which direction.” A high expected-movement number just means bigger swings are likely. It doesn’t tell you up or down.
- Using an old lot size to work out money involved. This changes from time to time, so always check the current one.
- Jumping into trading options without understanding the risk. These bets can end up worth nothing, and if you’re on the selling side, losses can be large. This guide is only about reading the table, not a suggestion to start trading.
Common questions
1. What does it mean when a lot of bets are open at one level?
It means a lot of people have placed bets there and haven’t closed them yet. On its own, it doesn’t tell you if those people expect the price to rise or fall. Looking at how many are new today, along with the price movement, tells you more.
2. What’s the difference between “bets open” and “how much traded today”?
“How much traded today” counts everything bought and sold today. “Bets open” counts only what’s still active, carried forward. A level can see a lot of trading today but still have few bets left open (fast in-and-out activity), or the other way round (people holding on).
3. How do I know which row to look at first?
Look for the price level closest to where the index is trading right now. Most apps highlight this row for you automatically.
4. If there are more “will go down” bets than “will go up” bets, does that mean the price will rise?
It’s often read that way, but it’s just one clue about mood, not a guarantee. It works best alongside the price trend, not on its own.
5. Does the price really move toward the “max pain” level?
Not always. It happens sometimes near the settlement date, but it’s a pattern people have noticed, not something that happens every time.
6. Do I need a trading account to look at an option chain?
No. NSE shows this data live and for free on its own website, for anyone who wants to learn how to read it.
7. Do I have to trade options to find this useful?
No. Many people who only buy and hold shares still glance at the option chain just to get a feel for where a lot of traders think an index might struggle to rise or fall, without ever placing an options bet themselves.
Trading F&O with Ashlar
If you do decide to try options trading, it helps to do it through a SEBI-registered broker that shows this table clearly.
Ashlar at a glance
Ashlar Securities Pvt. Ltd. is a SEBI-registered brokerage.
Stock Broker: INZ000203739
Depository Participant: IN-DP-2362016
Want to see it for yourself?
Open your account with Ashlar and look at the live Nifty and Bank Nifty option chains yourself.
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Investments in securities market are subject to market risks. Read all related documents carefully before investing.
The numbers used in the example above are for teaching purposes only and are not real market data. Lot sizes and exchange rules change from time to time — always check the exchange website for the latest figures before trading.