0 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 option) the underlying security when the option is exercised. Hence, strike price is also known as exercise price.

Strike Price, Option Premium & Moneyness

When selecting options to buy or sell, for options expiring on the same month, the option's price (aka premium) and moneyness depends on the option's strike price.

Relationship between Strike Price & Call Option Price

For call options, the higher the strike price, the cheaper the option. The following table lists option premiums typical for near term call options at various strike prices when the underlying stock is trading at Rs50

Strike Price	Moneyness	Call Option Premium	Intrinsic Value	Time Value
35	ITM	Rs15.50	Rs15	Rs0.50
40	ITM	Rs11.25	Rs10	Rs1.25
45	ITM	Rs7	Rs5	Rs2
50	ATM	Rs4.50	Rs0	Rs4.50
55	OTM	Rs2.50	Rs0	Rs2.50
60	OTM	Rs1.50	Rs0	Rs1.50
65	OTM	Rs0.75	Rs0	Rs0.75

Relationship between Strike Price & Put Option Price

Conversely, for put options, the higher the strike price, the more expensive the option. The following table lists option premiums typical for near term put options at various strike prices when the underlying stock is trading at Rs50

Strike Price	Moneyness	Put Option Premium	Intrinsic Value	Time Value
35	OTM	Rs0.75	Rs0	Rs0.75
40	OTM	Rs1.50	Rs0	Rs1.50
45	OTM	Rs2.50	Rs0	Rs2.50
50	ATM	Rs4.50	Rs0	Rs4.50
55	ITM	Rs7	Rs5	Rs2
60	ITM	Rs11.25	Rs10	Rs1.25
65	ITM	Rs15.50	Rs15	Rs0.50

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