Lesson 0.2. Options Without the Maths

Options Flow course · stage 0

Video version (in Russian) · 14 minutes

In front of you is a real table — the very one our daily analysis is built on. This is CME exchange data for the previous trading day, 21 August 2026. Any registered user of the exchange's site can open the same table: we are not inventing anything, we are reading public data.

Today we will go through it completely, so that by the end of the lesson every cell makes sense to you. There will be no formulas: we are not going to trade options, we are learning to read the footprints of those who do.

At first glance the table looks like a wall of numbers. In reality it has only three coordinates and one number in each cell. Let's take them in turn.

First — what an option actually is

The closest everyday analogy is an insurance policy.

You insure your car: you pay a premium, and if something goes wrong the insurer covers the damage. If nothing goes wrong, the insurer keeps the premium, and that is a fair price for peace of mind.

An option works the same way. The buyer pays a premium and receives a right — not an obligation — to buy or sell at a price fixed in advance. The seller receives the premium and takes on an obligation: if the buyer chooses to use the right, the seller has to complete the trade.

Hence the asymmetry we'll need later: the buyer's risk is limited to the premium, the seller's is not. That is exactly why sellers, as we saw in the previous lesson, are forced to defend themselves with futures when price moves toward their levels.

Coordinate one: the strike — the left column

The strike is the price the right is tied to. In the table it is the leftmost column: 1.02 … 1.215.

Two things to notice.

First, these are euro futures prices, not the quote on your spot chart. Options on CME trade on the future, and the whole table lives on the futures scale. The gap between the future and spot is called the basis and gets its own lesson — for now just hold on to this: the numbers on the left are the future.

Second, the exchange's grid of strikes is even — the step is constant. It only gets wider as you move away from the current price: that is how CME's rules work, more strikes near the market, fewer far from it.

But in this table you are not seeing the whole grid. Only the strikes where something changed yesterday are kept; rows with no movement simply aren't printed. That is why the gaps between neighbouring rows look uneven — a feature of the display, not of the exchange's grid.

Coordinate two: the contract and its term — the header

The top row is a list of contracts: MO4Q6, TU4Q6, WE4Q6, SU4Q6, EU4Q6, MO5Q6, TU1U6, WE1U6, SU1U6, EUUU6.

Under each one is the term: 2DTE, 3DTE, 4DTE, 5DTE, 6DTE, 9DTE… DTE means days to expiration. The first column expires in two days, the second in three, and so on — consecutive business days, starting from the nearest Monday.

So every column is a separate options contract with its own date of death. The codes read simply:

• MO — Monday, TU — Tuesday, WE — Wednesday, SU — Thursday, EU — Friday;
• the digit is the week number: MO4Q6 is the Monday of week four;
• the letter before the year is the month in the standard exchange code: Q — August, U — September; 6 is 2026.

So MO4Q6 is the Monday of week four of August, SU4Q6 is the Thursday of the same week, EU4Q6 is the Friday. Then comes the next week: MO5Q6, and after it the September ones — TU1U6, WE1U6, SU1U6. The last column, EUUU6, is the September monthly contract.

Weekly and monthly series expire on Fridays; occasionally the date shifts to Thursday because of a holiday.

The practical meaning: a contract with 2DTE and a contract with 13DTE are different money with different horizons. Mass that expires the day after tomorrow and mass that lives another two weeks affect price differently. That is why the table separates them into columns instead of piling them together.

Coordinate three: calls and puts — the C and P columns

Each contract is split into two columns: C and P.

C — call is the right to buy at the strike. It is bought by those hedging against a rise or betting on one.

P — put is the right to sell at the strike. Insurance against a fall, or a bet on one.

And that is the whole structure: strike × contract × type. Any cell in the table is the intersection of those three coordinates. There is nothing else in it.

What the number in the cell means

The cell holds a mass of contracts. Not all of the mass standing on the strike, but the part that arrived or left over the previous trading day.

A plus means mass arrived: on this strike, in this contract, on this side, new positions appeared yesterday. A minus means mass left — look at the red cells, −128, −12, −7, −3. There are fewer positions there than the day before.

It is this layer — the mass that arrived and left — that our reports are built on. It shows the fresh decisions of participants: where money came in yesterday and where it went out. The accumulated stock of positions exists too, but what we work with is the movement.

The number itself is open interest, or more precisely its daily change. What open interest is, how it differs from trading volume and why it can fall is the subject of the next lesson. For today it is enough to understand: the number in the cell tells you how many contracts arrived or left yesterday on this strike, in this contract, on this side.

How big is one contract

The numbers in the cells are a count of contracts, not money and not lots of some notional size. So it matters what stands behind a single unit.

One contract is 125,000 EUR. The rest is written in the contract specification on the CME site; here is what it says about the Monday series of week four (MO4Q26) from our table:

• exercise style — European: the right can only be used on the expiration date, not earlier;
• settlement — deliverable: exercising creates a position in the future;
• expiration date — 24 August 2026, 18:00 New York time;
• quotation — in dollars and cents per euro.

Let's convert our row. On the 1.17 strike in the Friday contract of week four, 2,363 calls were added — a notional of around 295 million euros. There are 3,574 puts on the same strike — almost 447 million. In the September monthly, 2,425 puts — over 300 million.

Reading a full row

Let's put it all together and read one row — the 1.17 strike.

What it says:

• in the contract with 6DTE (expiring at the end of the week), the 1.17 strike gained 2,363 calls and 3,574 puts yesterday — the largest activity in the whole table;
• in the contract with 13DTE, the same strike holds 2,425 puts and 140 calls;
• in the near contracts (2DTE, 3DTE) there is almost nothing on this strike: single contracts.

What we know for certain: yesterday the market worked intently around the 1.17 price, and specifically in contracts living another few days and up to two weeks, not in the ones expiring the day after tomorrow.

What we do not know: who is on which side. Every call bought has a seller with the opposite interest. A large number on the P side does not mean 'everyone expects a fall' — it means many rights to sell appeared on that strike, and those rights have two sides.

That discipline — separating 'what is visible' from 'what was assumed' — is the main skill in reading these maps. Everything we do in stage 1 rests on it.

In the money and out of the money

The last pair of terms for today is the position of the strike relative to the current price.

• A call with a strike below the price is already 'winning': the right to buy below the market has value. That is in the money, ITM.
• A call with a strike above the price is out of the money, OTM: it only works if price gets there.
• For a put it is mirrored: in the money means strikes above the price, out of the money means below.
• A strike right next to the price is at the money, ATM.

As price moves, options cross from OTM into ITM and back — and the interest of their holders and sellers changes on the fly. That is why in our reports the mass in the money and the mass out of the money are split into separate blocks: you have seen the ITM and OTM labels on the cards of the #Table series. What each block means we cover in stage 1.

What a right costs

We will not calculate the premium, but understanding what it is made of matters — otherwise it is unclear why some strikes gather thousands of contracts while others sit empty.

Distance to the strike. A right the market has a long way to reach is cheap: the odds of it being needed are low. The closer the strike is to the price, the more expensive the right.

Time to expiration. More time means more chance price gets there, so the right costs more. And the reverse: an out-of-the-money option loses value on its own with every passing day. Time works against the buyer and for the seller — which is why the DTE column in the header matters no less than the strike.

Expected size of the moves. If a storm is expected (a central bank meeting, important data), rights get more expensive. If the market is asleep, they get cheaper.

The practical takeaway for reading the table: contracts on far strikes are cheap, so it is easy to build up a lot of positions there for not much money. A thousand contracts next to the price and a thousand far from it are very different in significance, even though both look equally impressive in the table.

What happens on expiration day

Every option arrives at its date in one of two states.

Out of the money — the right is useless, the option burns out. The premium stays with the seller. Positions on that strike disappear.

In the money — the right is used. For options on futures that means the holder receives a futures position at the strike price.

Hence a practical consequence: after an expiration the table changes in a jump — a whole column leaves, and the next day's picture looks different even though the market has not moved anywhere. And a second one: the closer the date, the sharper the participants' interest in which side of the strike price ends up on. That is the second mechanism from the previous lesson.

Four misconceptions

'Lots of calls means up.' No. For every call bought there is one sold. Direction does not follow from a single number.

'A big number equals a strong level.' Not always: what matters is which contract that number is in and how far the strike is from the price. A thousand contracts in a series expiring in two weeks and a thousand in a series expiring tomorrow are different stories.

'These are the same support and resistance levels.' Related, but not the same: classic levels are drawn from past prices, option levels from money standing right now and from the date that money is tied to. An option level can 'switch on' and 'switch off' on a particular day.

'You need to know how to trade options to read this.' You don't. We read footprints; you trade whatever you are used to.

Check it yourself

Go back to the table at the start of the lesson and find everything we talked about: the grid of strikes on the left, the contract codes and DTE along the top, the C and P columns, the large numbers around 1.17 and the red negative cells. If each of those now reads clearly, the lesson has done its job.

Glossary for this lesson

• Call (C) — the right to buy at the strike.
• Put (P) — the right to sell at the strike.
• Strike — the price the right is tied to; in the table it is the left column, on the futures scale.
• Premium — the price of the right itself.
• Expiration — the date the right ends.
• DTE — how many days are left until that date.
• ITM / OTM / ATM — in the money / out of the money / at the money.

What's next

The numbers in the table are changes in open interest. In the next lesson we work out what that quantity is: how open interest differs from trading volume, why it grows and why it can be negative. We will work on this same table — it becomes our permanent testing ground.