Options
Strike Price — Definition & Example
The pre-agreed price at which the option holder can exercise — buy (call) or sell (put) the underlying.
The strike price is the fixed reference price baked into the option contract. It determines whether an option is in-the-money (ITM), at-the-money (ATM), or out-of-the-money (OTM) at any given underlying price. ATM strikes have the highest absolute time value; ITM strikes have the most intrinsic value; OTM strikes are pure time value with no intrinsic value.
Example
NIFTY at 24450. The 24500 CE has a strike of 24500 (slightly OTM). The 24400 CE has a strike of 24400 (ITM by 50 points). The 24450 CE is ATM.
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