Options can be extremely lucrative, but also very dangerous if not properly understood. One of the first steps in learning how to trade options is to understand how to read an options table. Below is an example of a basic options table of Google (GOOG) expiring in October 2011:
Calls and Puts: There are two types of basic options: calls and puts. Calls are inherently the same as going long on a stock, while puts are like going short.
Expiration: This table shows the expiration on Friday, October 7th, 2011. Options used to expire only on the third Friday of every month. Now, a lot of options expire almost every Friday of any month. If you are holding one f the options above on October 7th, you must exercise it or sell it. Otherwise, the option will expire worthless, or will be exercised automatically.
Strike Price: This is the price that an underlying stock can be bought or sold at. So if you buy a GOOG 515.00 Call you are “in the money” when GOOG is above $515.00. The price of GOOG at this time is $524.23, so Strike Prices 515 to 520 are all “in the money”. Typically, strike prices increase by $2.50 increments, however for some very volatile or high prices stocks it can be $5.
Symbol: You may be wondering what the extra letters and numbers are doing next to the familiar GOOG. Although it seems confusing it is relatively straightforward.
Symbols consist of the root symbol (GOOG) + the last two digits of the year (2011, so “11”) + the day (7th of October so “07”) + the month and option type code (“J” for October Call, “V” for October Put) + strike price code (“515”).
Hence, together it looks like GOOG + 11 + 07+ J + 515 = GOOG1107J515.
Last: This is the last price someone has paid to purchase the options contract. While a call may be “in the money” it may still not be profitable. For example, if you were holding KOEV.X you would only turn a profit if KO was priced at $45.85 (42.50+3.35)
Chg: This is the price change from yesterday’s closing price to today’s current price.
Volume: The number of contracts traded for the day
Open Int: The open interest is the total number of contract that are available to be traded at that strike price. Meaning the contracts have not yet been exercised or expired.