Strike Price. Definition: The strike price is defined as the price at which the holder of an options can buy (in the case of a call option) or sell (in the case of a put ...TogglenavigationTheOptionsGuideHome(current)BinaryOptionsStockOptionsStockOptionStrategiesFuturesOptionsCryptoTrading(new!)SearchHome/StockOptionBasicsStrikePriceDefinition:Thestrikepriceisdefinedasthepriceatwhichtheholderofanoptionscanbuy(inthecaseofacalloption)orsell(inthecaseofaputoption)theunderlyingsecuritywhentheoptionisexercised.Hence,strikepriceisalsoknownasexerciseprice.StrikePrice,OptionPremium&MoneynessWhenselectingoptionstobuyorsell,foroptionsexpiringonthesamemonth,theoption'sprice(akapremium)andmoneynessdependsontheoption'sstrikeprice.RelationshipbetweenStrikePrice&CallOptionPriceForcalloptions,thehigherthestrikeprice,thecheapertheoption.Thefollowingtablelistsoptionpremiumstypicalforneartermcalloptionsatvariousstrikepriceswhentheunderlyingstockistradingat$50StrikePriceMoneynessCallOptionPremiumIntrinsicValueTimeValue35ITM$15.50$15$0.5040ITM$11.25$10$1.2545ITM$7$5$250ATM$4.50$0$4.5055OTM$2.50$0$2.5060OTM$1.50$0$1.5065OTM$0.75$0$0.75RelationshipbetweenStrikePrice&PutOptionPriceConversely,forputoptions,thehigherthestrikeprice,themoreexpensivetheoption.Thefollowingtablelistsoptionpremiumstypicalforneartermputoptionsatvariousstrikepriceswhentheunderlyingstockistradingat$50StrikePriceMoneynessPutOptionPremiumIntrinsicValueTimeValue35OTM$0.75$0$0.7540OTM$1.50$0$1.5045OTM$2.50$0$2.5050ATM$4.50$0$4.5055ITM$7$5$260ITM$11.25$10$1.2565ITM$15.50$15$0.50StrikePriceIntervalsThestrikepriceintervalsvarydependingonthemarketpriceandassettypeoftheunderlying.Forlowerpricedstocks(usually$25orless),intervalsareat2.5points.Higherpricedstockshavestrikepriceintervalsof5point(or10pointsforveryexpensivestockspricedat$200ormore).Indexoptionstypicallyhavestrikepriceintervalsof5or10pointswhilefuturesoptionsgenerallyhavestrikeintervalsofaroundoneortwopoints.Next:OptionsPremiumYouMayAlsoLikeContinueReading...BuyingS