Serpent is the Jiva or the individual soul which rests upon Siva, the Paramatman or the Supreme Soul.

Serpent is the Jiva or the individual soul which rests upon Siva, the Paramatman or the Supreme Soul. The five hoods mean the five senses or the five Tattvas, viz., earth, water, fire, air and ether. They also represent the five Pranas, which hiss in the body like the serpent. The inhalation and exhalation are like the hissing of the serpent. Lord Siva Himself became the five Tanmatras, the five Jnanendriyas, the five Karmendriyas and other groups of five. The individual soul enjoys the worldly objects through these Tattvas. When the individual attains knowledge through control of the senses and the mind, he finds his eternal resting abode in Lord Siva, the Supreme Soul. This is the esoteric significance of Lord Siva wearing the snake on His body