Bearish or bullish on options; how can you tell?

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: How do options tell if investors are bearish or bullish?

A: Getting a glimpse at how other investors feel about a stock requires knowledge of the options market.

Options are financial instruments that give their owners the right, but not the obligation to buy or sell an investment at a preset "expiration" date in the future at a preset "strike" price.

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Typically, options are used by investors to hedge their bets and protect themselves against big losses if a stock goes south. Options can also be used to speculate and make massive bets on stock movements with little up front investment.

But savvy investors, who may not want to buy or sell options themselves, can use this financial instruments to get a glimpse at what investors are feeling about a particular stock. This data is available anywhere you can look up a so-called options chain, available at most brokers' Web sites and even many public Web sites that dispense stock quotes.

Getting an options chain is similar to how you'd look up a stock price. Simply enter the stock's symbol and then look at the chain, which is a list of all the prices of various options based on their strike prices and expiration dates. The chain also shows you how much trading volume there is at different strike prices and expiration dates. Investors can use this information to see where a bulk of other investors are betting a stock will rise or fall to by a certain date in the future.