How to Read an Options Contract Chart (Beginner’s Guide)

So let's walk through how to read an options contract chart on unusual whales. So this page is the contract lookup and this is the contract that we're going to be using right up here. It's the BP 48 C10 30 2026. It's basically just shorthand for a BP call option with a $48 strike price that expires October 30th. So what's a call option first of all? So each call contract gives the buyer the right to buy 100 shares of BP at $48 a share before it expires. And at $48, that's called the strike price. Now people buy calls when they think that a stock is going to be going up. So right below the name is going to be a quick summary of the most recent trading day and over on the far right is the percentage OTM, which tells you how far the stock is from the strike price. And here it says that BP is about 3% below $48. When a call's strike is above where the stock is trading like this, people say that it's out of the money. That's OTM. Now below that is going to be the chart itself. And each bar here is going to show you how many contracts traded within this 10-minute window. And the colors are going to tell you how they traded. So every trade has two prices, right? There's the bid, which is what buyers are offering, and the ask, which is what the sellers want. So the green means that the trade filled at the ask, so the buyers were willing to pay up, right? Red means that it filled at the bid, which leans towards selling. And blue means that it landed somewhere in between. Now look at this huge green bar on Friday morning. So almost all of that day's activity hit all at once. One big burst like that usually means that a large trader or a few of them just started piling in at the same time. And that's what people mean when they say that a whale stepped in. Now to see what that burst actually added up to, you're going to scroll down to the history table and look at Friday, October 9th. You're going to start with vol, which is volume, meaning how many contracts were traded that day, and then OI, which is open interest, meaning how many were already open going into the day. Now, only 142 of these contracts were open that morning, but over 16,000 of them were traded. That's more than 100 times as many, and since you can't close a position that was never opened, a gap that big usually means that these were a lot of new positions. Next is going to be the average price paid, which was a dollar 12. So, if you held one until it expired, BP would need to finish above $48 plus that dollar 12, or about 49 12, for you to come out ahead. That's the bet that the traders are making here. Now, Friday's bid ask bars mostly green, it says about 81%, so 81% of that volume was traded at the ask, which points to a lot of heavy buying. Now, a little bit further over is going to be the floor column, and it shows 60%. So, what's a floor trade? A floor trade is basically going to be a block trade that's usually done by an institution, and that lines up with that one giant green bar on the chart. So, if you go over and compare this to Microsoft calls for Monday, they had plenty of volume as well, but it came through more than 1,600 smaller trades, and their floor column shows 0%. Then you've got multi, which is going to be short for multi-leg. Sometimes a trader buys one option and sells another at the same time, and it's that second piece really flip the whole bet. But Friday's on BP shows that 0% of these were multi-leg, so this looks like it was plain call buying. And then last is going to be your total premium, which is how much money went into these contracts. So, on Friday that was about 1.8 million. Now, whether that's a lot or not really depends on the stock, so if you go back and look over again at these Microsoft calls, they had more than 15 million, but on a company that size, that's going to be pretty normal. On a cheap BP call that barely had any open interest, that's something that really stands out. Now, there's one thing that all of this can't tell you on its own though. This buying could have been traders jumping in and out all on the same day, and every number that we just looked at would have been the same. So, what you really want to know is whether people held on to those contracts, and that's what open interest is going to show you. Now, this only updates once a day, it happens overnight. So, when you look at the next row up for Monday, open interest went from 142 all the way up to 15,000, almost 16,000, which means that almost all of Friday's volume turned into positions that people were still holding on the next trading day. So, you can try all of this out on any contract just by typing into the search bar in the contract look up. Just remember all of this is for educational purposes only, none of it is financial advice.