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 option) the underlying security when the option is exercised. Hence, strike price is also known as exercise price.
Strike Price, Option Premium & Moneyness
Relationship between Strike Price & Call Option Price
For call options, the higher the strike price, the cheaper the option.
Relationship between Strike Price & Put Option Price
Conversely, for put options, the higher the strike price, the more expensive the option.
Strike Price Intervals
The strike price intervals vary depending on the market price and asset type of the underlying. For lower priced stocks (usually $25 or less), intervals are at 2.5 points. Higher priced stocks have strike price intervals of 5 point (or 10 points for very expensive stocks priced at $200 or more). Index options typically have strike price intervals of 5 or 10 points while futures options generally have strike intervals of around one or two points.
This site and all information contained within is for informational purposes only. Nothing written here should be construed as specific investing advice.