Strike Price
The fixed price at which an option can be exercised — the anchor every payoff is measured from.
Definition
The strike price (or exercise price) is the pre-set price at which the holder of an option can buy (call) or sell (put) the underlying. It is fixed when the contract is created and never changes for that contract — only the premium moves.
How the strike sets moneyness
- ITM (in-the-money): a call strike below spot, or a put strike above spot — has intrinsic value.
- ATM (at-the-money): strike closest to the current spot price.
- OTM (out-of-the-money): a call strike above spot, or a put strike below spot — only time value.
Why it matters
The strike drives the premium, the breakeven and the risk-reward of every position. Lower-delta (further OTM) strikes are cheaper but less likely to pay off; closer or ITM strikes cost more but behave more like the underlying. Strike spacing on the chain (e.g. 50 or 100 points) sets how finely you can target a view.
Choosing a strike
Match the strike to your conviction and horizon: ATM for a balanced directional bet, OTM for cheap leverage on a strong move, ITM when you want delta close to the underlying. The max pain and OI walls on the chain show where strikes have the most open interest.
Compare strikes live
TradePulse's option chain lays out every strike with live premium, OI and IV — pick the strike that fits your view.