Strike Price
Also called: strike, strike price, exercise price, strike rate.
How it is read
The strike is the reference every other option concept is measured from. Whether an option is in, at or out of the money is a statement about the level. It says where the level sits relative to its strike. Intrinsic value is the distance between the two. The point at which a bought option returns what it cost is the strike moved by the premium paid. Strike intervals differ by instrument. Liquidity tends to concentrate on the round strikes people watch. Two adjacent listed strikes can therefore trade very differently.
What it does not tell you
A strike is a level, not a forecast. The number tells you where a contract is set. It does not tell you where price will go. A heavily traded strike is not evidence that the underlying will reach it. Open interest at a strike counts positions on both sides of it. Strike intervals are also revised by the exchange from time to time. So historical chains can carry a different set of levels from a current one.
See it in an experiment
Change one input in Market X-Ray and watch what happens.
Market X-Ray: Option Chain — Which option-chain columns answer my question?
Related concepts
Moneyness: What In, At and Out of the Money Actually Mean
Moneyness describes where a strike sits against the current level of the underlying. A call is in the money when the level is above its strike. It is at the money when the two are roughly equal, and out of the money below it. For a put, all of that reverses. The label is not a quality rating. It says how much of the premium is intrinsic value, and how much is a bet on movement, nothing more.
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