How to Read an Options Chain on Robinhood (Step-by-Step)
Cutting Through the Noise
An options chain looks intimidating the first time you see it. Rows of numbers, columns you don't recognize, green and red prices everywhere. Here's how to cut through the noise and find the trade.
Step 1: Open the Options Chain
- Open Robinhood → Search for your ticker (e.g., PYPL)
- Tap Trade → Trade Options
- You'll see a list of expiration dates — pick one 45–90 days out
- Select Calls (since we're betting the stock goes up)
Step 2: Read the Columns
The options chain shows you all available strike prices for that expiration. The key columns:
| Column | What It Means | What to Look For |
|---|---|---|
| Strike | Price you can buy the stock at | Choose ATM (closest to current price) |
| Premium (Ask) | What you'll pay per share | $0.50–$3.00 target range |
| Delta | Movement per $1 stock move | 0.40–0.60 |
| Volume | Contracts traded today | Higher = more liquid = easier to exit |
| Open Interest | Total outstanding contracts | Higher = more active market |
Step 3: Identify At-The-Money (ATM)
ATM is the strike price closest to the current stock price. This is your starting point.
If PYPL is trading at $42, the $42 strike is ATM. The $44 strike is slightly out-of-the-money (OTM). The $40 strike is slightly in-the-money (ITM).
Start with ATM. Don't chase cheap OTM options. "Cheap" options are usually cheap for a reason.
Step 4: Check the Bid-Ask Spread
The "bid" is what someone will pay to buy your option. The "ask" is what you'll pay to buy it. The difference is the spread.
A narrow spread (e.g., $0.90 bid / $0.95 ask) = liquid option. Good.
A wide spread (e.g., $0.50 bid / $1.20 ask) = illiquid. You're already underwater the moment you buy. Avoid.
Step 5: Place the Order
Once you've found your contract:
- Tap the row for your chosen strike
- Select Buy → Call
- Set quantity (start with 1 contract = controlling 100 shares)
- Use a limit order at or near the ask price (not market order)
- Review and confirm
Real Example — PYPL $42 Call, March 6 Expiry
| Strike | Premium | Delta | Volume | Decision |
|---|---|---|---|---|
| $38 | $4.20 | 0.78 | 210 | Too expensive |
| $40 | $2.85 | 0.62 | 380 | Slightly ITM |
| $42 | $0.95 | 0.45 | 1,240 | ✓ Our entry |
| $44 | $0.45 | 0.28 | 560 | Too far OTM |
| $47 | $0.12 | 0.10 | 90 | Lottery ticket |
The $42 ATM strike hit all our criteria: premium in range, Delta in the 0.40–0.60 zone, highest volume on the chain. That's the one we bought.
PYPL $42 Call — $0.95 → $2.96 in 4 days