Understanding National Grid PLC Options Chain on Interactive Brokers

Overview of the Screenshot

(Note: a full size of the screenshot appears at the end of the article)

This screenshot shows an options chain for National Grid PLC, a company listed on the London Stock Exchange (LSE), as displayed on the Interactive Brokers platform. This isn’t random. I own the stock, in two different places, and I’ll be transfering them over to Interactive Brokers as my first options trade, to practice selling puts. For me, it’s an ideas stock for different reasons. One is that I already own it and am not attached to it, it brings in five percent and has been flat for the decade I’ve owned it. So if it get’s called, it’s fine.

But also, the stock price is very low, at about ten pounds sterling, so I can learn options with a low stake to begin. My idea is to explain the process to you here, papertrade for a while as the stocks are being transfered over (and I’ll post the numbers here on my site so you can see how I’m doing), and then I’ll post again when I make the actual trade – hopefully we can learn together (as entertainment/education – not financial advice!).

An options chain is a table that lists all the available options contracts (calls and puts) for a specific stock or index, showing their prices, strike prices, expiration dates, and other key details. Let’s dive into each section.

Top Section: Market Data and Stock Information

At the top, you see some general market and stock-specific information:

• S&P 500 6013.46 ↑ 0.01%: This shows the current value of the S&P 500 index, a major U.S. stock market index, which is up by 0.01% at the time of the screenshot (February 24, 2025, 20:50, as indicated by the timestamp).
• NASDAQ Comp 19527.40 ↑ …: This shows the current value of the NASDAQ Composite index, another U.S. stock market index, which is also up but the exact percentage isn’t fully visible.
• Interactive Brokers Logo and Tabs: The logo for Interactive Brokers is at the top, and there are tabs like “Quote,” “Options,” “Fundamentals,” and “News” for navigating different types of information about National Grid.
• National Grid PLC LSE: This indicates the stock is for National Grid, a utility company listed on the London Stock Exchange. The stock’s current price is 971.20 GBp (British pence), and it’s up 13.00 (1.36%) from its previous close (as I understand it, this means 13 pennies (100 pennies in a British Pound (this is actually a good tip for beginners, make sure you know where the decimal is when being shown prices because is isn’t usually in the same place as when you’re buying things in shops, shares are often shown as greater fractions than 0.00 and in the past I’ve been caught out when I notice the final price of a trade)). For further understanding of this somewhat tricky fact of trading, check out the side post Understanding Decimal Placement in Financial Markets … To continue with the page analysis:
  • Ask: 971.60 x 12,935: The “ask” price is the lowest price a seller is willing to accept for the stock, here 971.60 pence, with 12,935 shares available at that price (971.60 = Nine pounds seventy one pence, meaning the decimal is two places to the right (to allow for greater precision)).
  • Bid: 971.20 x 8,833: The “bid” price is the highest price a buyer is willing to pay, here 971.20 pence, with 8,833 shares available at that price.

Middle Section: Options Chain Navigation

Below the stock price, there are buttons and options for exploring the options data:

• Options Chain: This button likely takes you to the detailed options table you see below.
• Analysis: This might offer tools or charts to analyze the options or stock further.
• Options Wizard: This is a tool within Interactive Brokers that helps users build and analyze options strategies, potentially guiding beginners through complex trades.
• VWAP 970.5071: VWAP stands for “Volume Weighted Average Price,” which is a trading benchmark that gives the average price a stock has traded at throughout the day, weighted by volume. Here, it’s 970.5071 pence for National Grid.
• Opt Vlm, IV Last, IV / Hist Vol, 52W IV Rank, 52W IV Perc, P/C Int, P/C Vlm, IV Cls: These are technical indicators related to options:
  • Opt Vlm: Options volume, or the total number of options contracts traded for National Grid that day (not specified here). (See the

    

    subarticle Understanding Options Volume for more information on this section).

  • IV Last: Implied Volatility (IV) is a measure

    

    of how much the market expects the stock price to fluctuate. Here, it’s 18.8% for the most recent data. (See What Is Implied Volatility (IV Last)? A Guide for New Investors for more detailed explanation).

  • IV / Hist Vol: Implied Volatility compared to Historical Volatility (how much the stock has actually fluctuated in the past). Here, it’s 104.2%, meaning implied volatility is higher than historical volatility. This is pretty confusing. So the IV (the figure before) is based on different things, such as the bid ask spread etc. and it shows how much the price might move during the life of the contract. Hist Vol shows if that current volitility is high, low or about average for how volitile it’s been in the past. It’s actually a ratio, so here 104% is confusing as it means +0.04% more than normal (so historically it would have been a tad above 18%). Higher volitility means higher option prices (as more chance of being exercised. See my more detailed explanation here: Understanding Options Historical Volatility on Interactive Brokers: A Beginner’s Guide.
  • 52W IV Rank: The rank of current implied volatility compared to the past 52 weeks (a year), here at 33, meaning it’s relatively low compared to the year.
    • To explain that a bit further, the first (IV last) figure shows how volitile it is now, and HV (historical Vol.) shows how volitile it was in the past (or rather how far above or below the average current volitility is). This Rank figure essentially ranks current IV within Historic volitility. So 50 would mean, at the minute, it’s about average volitility compared to how it’s been in the past. Here the example is 33, it’s a bit less volitile than usual, and so option prices will be a bit cheaper (as there’s less chance of it being exercised).
  • 52W IV Perc: The percentile of current implied volatility over the past 52 weeks, here 62%, meaning it’s in the higher half of the year’s range.
    • The IV Percentile shows how often the implied volatility (IV)—a measure of expected price swings—was below the current level over the past year. For National Grid PLC (NG), the current IV is 19.2%, and the 52W IV Percentile is 62%. This means that on 62% of days in the past year, the IV was lower than 19.2%, so volatility is a bit higher now than usual. On the other hand, the 52W IV Rank of 33 tells us where the current IV sits compared to its 52-week high and low. A rank of 33 means it’s on the lower side of that range, suggesting options aren’t as pricey as they could be during high-volatility periods.

      What does this mean for trading? The low IV Rank (33) indicates that options might be cheaper since big price swings aren’t expected, which can be good for buying options. But the higher IV Percentile (62%) suggests options are a bit more expensive than most days last year, so selling options might give you a better premium. These two metrics together help you see both the range (Rank) and how often volatility was lower (Percentile), giving you a clearer picture when deciding to buy or sell options on Interactive Brokers. See  for a more detailed explaination.
  • P/C Int: Put/Call Interest, or the ratio of open interest (number of outstanding contracts) in puts versus calls. Here the ratio is 0.66. So for every 100 calls, 66 are puts. If there were 66 calls for every 100 puts, then the ratio would show 1.52. So generally, a number under one shows more calls than puts and a number over one shows more puts than calls. A put/call ratio is calculated as puts divided by calls. If there are more puts than calls, the sentiment is generally bearish, and vice versa.
  • P/C Vlm: Put/Call Volume, or the ratio of trading volume in puts versus calls (not specified here).
    • Put/Call Volume (P/C Vlm) is a ratio showing how many put contracts are traded compared to call contracts (unlike Put/Call Interest, which measures the number of outstanding contracts opened but not yet closed, exercises or expired). A higher ratio, with more puts traded, may suggest bearish sentiment, but not always, as it could also indicate hedging.
  • IV Cls: Implied Volatility at close, here 18.862%, which is the IV at the end of the previous trading day. (Cls stands for close).

Right side of the table

The screenshot so far actually has a verticle scroll, thus all the information is not visible, there are actually a few more metrics only visible when scrolling to the right, and they appear as below.

Options Chain Table: Calls and Puts

The main part of the screenshot is the options chain table, which shows two types of options—calls and puts—for National Grid, with expiration dates of March 21, 2025 (25 days from February 24, 2025) and April 17, 2025 (52 days from February 24, 2025).

What Are Calls and Puts?

• Calls: These are options contracts that give the buyer the right (but not the obligation) to buy the underlying stock (National Grid, in this case) at a specific price (the strike price) before or on the expiration date. Investors buy calls if they think the stock price will rise.
• Puts: These are options contracts that give the buyer the right (but not the obligation) to sell the underlying stock at a specific price (the strike price) before or on the expiration date. Investors buy puts if they think the stock price will fall.

The table is divided into columns for calls, strike prices, and puts, with rows for different strike prices and expiration dates.

Columns in the Table

1. Bid (for Calls and Puts): The highest price a buyer is willing to pay for the option contract. For example, for a call with a strike of 941.25, the bid is 51.50.
2. Ask (for Calls and Puts): The lowest price a seller is willing to accept for the option contract. For the same call (strike 941.25), the ask is 54.00.
3. Last (for Calls and Puts): The last traded price for the option. For the 941.25 call, it’s 53.00; for the put, it’s 6.00.
4. Strike: The price at which the option can be exercised. This is the fixed price at which you can buy (for calls) or sell (for puts) the stock if you exercise the option. In the table, strikes range from 941.25 to 1040, in increments (e.g., 941.25, 950, 965, etc.).
5. IV (Implied Volatility): The expected volatility of the stock, shown as a percentage. For example, the 941.25 call has an IV of 19.2%, while the 950 call has 9.6%. Higher IV means the option is more expensive because the stock is expected to move more.
   1. Understanding Implied Volatility (IV) Across Strikes
      Implied Volatility (IV) reflects the market’s expected price movement for NG, but it’s not the same for all options. Each strike can have a different IV based on market demand and expectations. In the screenshot:

      • The 928 strike call shows an IV of 19.2%, meaning the market expects a 19.2% annualized price movement for this option.
      • IV for other strikes (like 960) isn’t displayed in this view but will likely differ. For example, the at-the-money 971.20 call has an IV of 8.00%, while the 971.20 put has an IV of 45.25%, showing how IV varies across strikes due to market sentiment (e.g., higher IV for puts indicates more expected downside risk).
        I don’t know how to see the other IVs for the other strikes. When I click one, a panel of information pops up for just a moment and it might be on that, but it quickly moved onto a page that says ‘no data’. It seems to possibly be a bug? (See the section below on adding columns (such as IV% to the chain)
6. Exchange: This indicates where the option is traded. Here, it’s “ICEEU” (Intercontinental Exchange Europe), the exchange for these National Grid options.

Adding Columns of New Information

There are various columns of information available not shown by default and they can be added by pressing the icon indicated below:

When this is clicked, it brings up the following options:

Choosing the Manage Columns option brings up various choices.

Here I’ve added one of the options, which was IV%, although it is showing no data even when I choose an option. I suspect it’s because I’ve not subscribed to a feed i

Rows in the Table

Expiration Dates (at the top of the put columns on the right)

• Mar21’25 (25 Days): Options expiring on March 21, 2025, which is 25 days from February 24, 2025.
• Apr17’25 (52 Days): Options expiring on April 17, 2025, which is 52 days from February 24, 2025.

The prices and implied volatilities can differ slightly between these expiration dates due to time decay (options lose value as they approach expiration) and market expectations.

Bottom Section: Navigation and Tools (not visible in the screenshot)

At the bottom, there are icons and buttons for navigating the Interactive Brokers platform:

• Home, Portfolio, Trade, Watchlist, More: These are menu options to access different parts of the platform, like your account, trading tools, or saved stocks.

Key Concepts for Beginners

• In the Money (ITM): An option is ITM if exercising it would be profitable. For calls, the stock price is above the strike price. For puts, the stock price is below the strike price.
• Out of the Money (OTM): An option is OTM if exercising it wouldn’t be profitable. For calls, the stock price is below the strike. For puts, the stock price is above the strike.
• At the Money (ATM): An option is ATM when the stock price is very close to the strike price, like the 971.20 strike here, close to National Grid’s current price of 971.20.
• Time Decay: Options lose value as they near expiration, especially OTM options.
• Implied Volatility (IV): Higher IV means options are more expensive because the market expects bigger price swings in the stock.

So this explains the basic layout. For an explanation of the option prices, puts and calls, with my (reallife) example of how I intend to be trading options on this stock, see the detailed article: Understanding Options Trading with Interactive Brokers: Maximizing Premiums on National Grid Shares