Options chain metrics | Robinhood

Options chain metrics

An options chain is where you browse options contracts by strike price, expiration date, and more. It’s easy to customize which metrics display on your options chain, whether you’re trading in the app or on the web.

Note

You can customize the metrics for when you’re buying or selling calls and puts, and each strategy in the Options Strategy Builder. Updating the metrics for one strategy will not affect the metrics for other strategies.

To customize your metrics in the app, go to an options chain and select Edit (pencil icon). On the web, click on 1 of the first 2 metrics after Strike Price.

Robinhood offers the following 4 categories of metrics.

Price metrics

The bid price is the highest price buyers in the market are willing to pay for an options contract. The ask price is the lowest price sellers in the market are willing to accept for an options contract. The bid price will always be lower than the ask price. Traders look at the bid/ask spread to determine the liquidity of the contract: the wider the spread, the less liquid the contract. The midpoint between the bid and the ask is the mark price. Check out What is a bid/ask spread to learn more.

The last price is the price the contract was last traded at. This isn’t necessarily what you should expect to pay or be paid for the contract. Traders may also look at the net change or % change, which measures the change from the previous day’s closing price (also called the previous close) to the mark price.

The high price and low price can also be useful to establish a range for options prices. These are the highest or lowest price the contract was traded at during the most recent trading day.

Takeaway
  • Bid price: The highest price buyers in the market are willing to pay for an options contract.
  • Ask price: The lowest price sellers in the market are willing to accept for an options contract.
  • Mark price: The midpoint between the bid price and the ask price. Note that if there are no bids, the mark price will show as $0.01.
  • Last price: The price the contract was last traded at. This isn’t necessarily what you should expect to pay or be paid for the contract.
  • Previous close: The price of the contract at the previous trading day’s close.
  • High price: The highest price the contract was traded at during the most recent trading day.
  • Low price: The lowest price the contract was traded at during the most recent trading day.
  • Net change: The net change from the previous day’s closing price to the mark price.
  • Net (or %) change: The percent change from the previous day’s closing price to the mark price.

Volume metrics

There are a few volume metrics traders use to evaluate liquidity, activity, and interest in an options contract.

Volume is the number of contracts that have been traded today. Volume is generally used to gauge the level of activity for a particular options contract.

Traders may also look at the bid size and ask size, which can help you measure the depth of interest from buyers and sellers. Bid size is the number of contracts buyers in the market are willing to buy at the bid price. Ask price is the number of contracts sellers in the market are willing to sell at the ask price.

Open interest is the total number of open contracts that are yet to be closed or exercised. This is one way to gauge the liquidity of an options contract: the higher the open interest, the more liquid the contract.

Takeaway
  • Bid size: The number of contracts buyers in the market are willing to buy at the bid price.
  • Ask size: The number of contracts sellers in the market are willing to sell at the ask price.
  • Volume: The number of contracts that have been traded today.
  • Open interest: The total number of open contracts that are yet to be closed or exercised.

The Greeks

Options Greeks can help you measure a contract’s sensitivity to various factors. The following are the 5 main Greeks – you can check out What are Options Greeks for more information.

Delta: A theoretical estimate of how much an option’s value will change if the underlying stock’s price increases $1.

Gamma: A theoretical estimate of how much an option’s delta will change if the underlying stock’s price increases $1.

Theta: A theoretical estimate of how much an option’s value will change for each calendar day that passes.

Vega: A theoretical estimate of how much an option’s value will change if implied volatility increases 1%.

Rho: A theoretical estimate of how much an option’s value will change if the risk-free interest rate increases 1%.

IV & probability metrics

There are a couple ways to calculate volatility: historical volatility and implied volatility. Options traders primarily look at implied volatility, a statistical measure of the market’s expectation for future volatility of the underlying stock. Higher implied volatility means higher premiums, and vice versa (all else equal). Check out Volatility explained to learn more.

When evaluating the price of an option, traders will consider the breakeven, the price the underlying stock has to reach for the contract to break even at expiration. For a call, this is the strike price plus the premium. For a put, this is the strike price minus the premium. The to breakeven is the percent the underlying stock’s price (calculated using the mark price) must change to reach the breakeven price at expiration.

One of the simplest probability metrics is the chance of profit. This is the theoretical probability that the contract will be profitable at expiration (all else equal). For a call, this is the probability that the underlying stock’s price will be greater than the strike price plus the premium. For a put, this is the probability that the underlying stock’s price will be less than the strike price minus the premium.

Takeaway
  • Implied volatility: A statistical measure of the market’s expectation for future volatility of the underlying stock.
  • Breakeven: The price the underlying stock has to reach for the contract to break even at expiration.
  • To breakeven: The percent the underlying stock’s price must change to reach the breakeven price at expiration.
  • Chance of profit: The theoretical probability that the contract will be profitable at expiration.

Disclosures

Options trading entails significant risk and isn't appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Robinhood Financial doesn't guarantee favorable investment outcomes. The past performance of a security or financial product doesn't guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. Examples contained in this article are for illustrative purposes only. Supporting documentation for any claims, if applicable, will be furnished upon request.

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Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

© 2024 Robinhood. All rights reserved.