The National Stock Exchange (NSE) enjoys much influence on the Indian financial market. An ‘Option chain’ or ‘Options matrix’ is a powerful financial tool offered by the NSE. It serves as a guide for investors and traders to navigate through the different options available. Here is everything you need to know about the NSE option chain to up your trading game.
An option chain is actually an organized and in-detail listing of all the option contracts that are available for a specific underlying asset (this could be anything like stock, index, etc.). The option chain provides a comprehensive overview of all the available options for any given underlying asset, which creates a scope for traders to consider all the aspects and make an informed and well-thought-out decision.
The NSE Option Chain serves as a hotspot of information and to yield maximum benefits from the same, one needs to understand the components that make up an option chain. Let us read about them, one by one.
Underlying Asset
The first and foremost component of the NSE Option Chain is determining the particular underlying asset. The asset could be anything ranging from a stock, or index, to even a commodity. Once that is done, you can easily ascertain what your specific underlying asset is deprived of.
Expiry Dates
The options available on an NSE Option chain have varying expiry dates. They are also arranged accordingly on the chain so that it becomes easy for you to filter out the options that align best with your trading horizon.
Strike Prices
Every expiry date on the Option chain comes with varying strike prices. The said prices indicate the price at which the underlying asset in question can be bought or sold. This provides the traders with a scope to compare the prices and make the best selection according to their expectations.
Call Options
On the option chain, under each strike price are listed call options. The call options give the holders the right to purchase the underlying asset at the mentioned strike price, without obliging them for the same. A detailed account of the bid and ask prices for call options is also provided on the option chain.
Put Options
Put options are listed under each strike price. They provide the holders with the right to sell the underlying asset in question at the mentioned strike price. Bid and ask prices for it are also provided on the option chain.
Open Interest
This represents the total number of outstanding option contracts for a particular strike price and expiry date.
Volume Column
This indicates the total number of option contracts that have been traded for a particular strike price and expiry date.
Option Greeks
They represent the change that various factors may bring about in an option’s price. This negates a lot of risk in trading.
An NSE Option Chain is a valuable tool with a diverse range of uses. It could be used for several purposes such as ascertaining the market prices, aiding risk management, devising a trading strategy, and analyzing market sentiment. These days, several trading platforms have come into existence. 5paisa is a tried, tested, and trusted online trading platform that is not only beginner-friendly but also makes the entire trading process much easier.
