Reading option quotes is not as difficult as working on the chain gang. And you can quote me on that. Using Discover Brokerage screen shots, let's look at an option chain.

Each option contract has a specific symbol. Therefore, a stock that has options on it (people don't trade options on every stock) will have several options symbols. This list of options symbols is called an option chain. To view all of the available option contracts, enter the company's ticker symbol in the "option chain" feature (there should be some equivalent wherever you access your quotes).

Option Chain

The Magic Kingdom (DIS:NYSE) constitutes our example. The top portion is a standard stock quote - the current trading price is vital since it tells you whether a contract is "in the money" or "out of the money."

The chain itself is just under the stock quote. The below picture is an abbreviated version of the actual chain, which is several pages long. An option quote is similar to a stock quote, except you're evaluating the contract instead of the share itself.

• Symbol/Description: The capitalized letters, "DISKS" for example, are the symbols for the individual contracts. NOV 1998 is the expiration date (contracts expire on the third Friday of the listed month). 22.5 is the strike price. Call is the type of contract. Hence, this contract is a call contract with a 22.5 strike that expires on November 21, 1998.
• Bid: How much the market maker will pay you for the contract.
• Ask: How much you will pay for the contract (multiply by 100 to get the cost of the contract).
• Last: The price of the last transaction for this contract.
• Change: The change in price (of the contract) for the day.
• Volume: The number of these contracts that have been traded that day.

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