Reading Options Listings and Charts
Options price listings vary in appearance from site to site, but most will contain the following basic information. Here's a breakdown of what they list and what it means.
Shown below is one line from such a chart:
C Jun 400 27.80 27.90 27.85 .05 138 3
GOOG (above the line) indicates the company's stock symbol, in this case Google.
Column 1 identifies the type of option, whether a Call or a Put.
A Call is a contract granting the right to buy the underlying asset at a set price, a Put to sell at a set price - called the Strike Price. There are more exotic types of options (they're actually called 'exotics'), such as a 'chooser'. A chooser allows the investor to choose which type of option the contract will become at some point prior to expiration.
Column 2 shows the month during which the option contract will expire.
All options have an expiration date, by or on which the contract must be settled. The option at that point is either exercised by buying/selling the underlying asset, or simply losing the premium - the cost of the option.
All US options effectively expire on the third Friday of the listed month. So for example, in 2006, a June option would expire on June 16. This is the last day on which an investor can take an action, such as trading the contract or exercising the option.
Column 3 shows the Strike Price, which is the price at which the underlying asset would have to be bought or sold if exercising the option.
Column 4 states the Bid, the price a potential buyer is willing to pay for the option contract. Note this is the premium for the option, not the price of the underlying stock.
Column 5 states the Ask, the price at which an investor is willing to sell.
Column 6 shows the Last Sale, which lists the amount the option last sold at.
Column 7 lists the Net (or Change), the net change in price over the previous sale. (Charting the Net, obviously, is one basic aid in determining trends.)
Column 8 displays the Open Interest. Open interest is the total number of options open. Since options have an expiration date in the future, at a given time there are a set number of un-exercised options contracts outstanding. If today's date were April 1, a certain number of options Call contracts for June Google (GOOG) would be open.
The number can change without expiration since, unlike stock shares, new contracts can be written. True, new shares can be floated, but that's a longer term process. Some charts will show the total Open Interest summing a number of expiration dates. This number is frequently charted to form part of a trading strategy. Statistical studies show that the amount of Open Interest correlates with price changes. Exactly how, as with any technical analysis, is a matter of ongoing debate.
Column 9 shows the current volume of trades for the day.
Some listings will show the stock or options symbol for a company, such as GOOG (Google stock symbol) or GOOGPNT (Google Put option). Some will also include a -E, for example, or other letter to indicate the exchange - such as, the CBOE (Chicago Board of Exchange), or CME (Chicago Mercantile Exchange).
Keep in mind when calculating the amount of your investment that options contracts are typically for 100 shares. I.e. one option contract is an option on 100 shares. So, a June option on GOOG listed for 27.80 would cost $2,780 (excluding commission).