Sifting through the numerous stock options available to trade can be tricky. Financial websites and brokers, however, display a stock’s available options in organized tables so that you can compare their details. A stock option is a contract that gives you the right, but not the obligation, to buy or sell a stock at a predetermined “strike” price before it expires. Tied to each stock are multiple stock options that trade at different prices. You can read stock options tables to figure out which options best fit your investment portfolio.
Visit any financial website that provides options quotes. Type a stock’s name or ticker symbol in the quote text box and click “Get Quote” to view its options tables.
Identify the highlighted month and year at the top of the table. The options in the table expire on the third Friday of that month. You can click the other available months to check out options with different expirations.
Review the table’s layout. A column of strike prices typically splits the table in half. Call options are on the left side and put options on the right, with identical column headings on either side. A call option entitles you to buy 100 shares of stock, while a put gives you the right to sell 100 shares. Each strike price applies to the call and put option in that row. All dollar amounts are in per-share figures.
Pick an option on the table and identify its strike price. This is the price to buy or sell the underlying stock if you choose to exercise the option. In this example, assume one of the call options has a $10 strike price. This option entitles you to buy 100 shares at $10 per share before it expires.
Find the prices in the “bid” and “ask” columns. To buy an option contract, you pay the ask price. When you sell, you receive the bid. Because these are per-share prices, multiply them by 100 to figure your total price. In this example, assume the bid price is $11.25 and the ask is $11.35. If you want to buy one contract, you will pay $1,135 total, or $11.35 times 100.
Identify the amounts in the “last” and “change” columns. The last price is the amount for which the option recently traded. The change is the amount the price has increased or decreased since the previous day’s closing price. In this example, assume the last price is $11.75 and the change is $0.25. This means the option recently changed hands for $11.75 per share, or $1,175 total, and rose 25 cents -- or $25 total -- since the previous day’s close.
Find the numbers in the “volume” and “open interest” columns. The volume is the number of contracts traded in the current day. Open interest is the number of outstanding contracts currently held by investors. These reveal how actively the option is traded. In this example, if the volume is 12,000 and the open interest is 20,000, the option is traded relatively frequently.
- An options table highlights options that are “in the money.” This means that the underlying stock’s market price is above a call option’s strike price or below a put option’s strike price.