Strike Price
The fixed price at which the option holder can buy (call) or sell (put) the underlying asset if they choose to exercise.
The strike price (also called the exercise price) is written into the contract at inception and does not change. For a call, it is the price the buyer would pay for the underlying. For a put, it is the price the buyer would receive.
The relationship between the strike and the current spot price determines whether the option is in the money, at the money, or out of the money — which directly affects the premium and the delta.
Example
A trader buys an SPY $530 call when SPY is at $525. The $530 strike is $5 out of the money. SPY must clear $530 before the call has intrinsic value; the trader needs it to reach at least $530 + premium to break even.
Related Terms
At the Money (ATM)
An option whose strike price equals (or is very close to) the current spot price of the underlying.
IntermediateButterfly Spread
A 3-leg defined-risk options strategy: buy 1 lower-strike, sell 2 middle-strike, buy 1 higher-strike — all at the same expiry. Max profit if price pins the middle strike.
IntermediateCall Option
An options contract giving the buyer the right to purchase the underlying asset at the strike price before or on expiration.
BeginnerCash-Secured Put
Selling a put while setting aside enough cash to buy the shares if assigned — collecting premium with the willingness to own the stock at the strike.
IntermediateCovered Call
An options strategy where the holder of a long stock position sells a call option against it, generating income at the cost of capping upside.
IntermediateOpen Interest (Options)
The total number of outstanding (unclosed) option contracts at a given strike and expiry. Rising OI confirms new money entering; it gauges liquidity and where positioning is concentrated.
IntermediateOptions Chain
The quoted matrix of all available calls and puts for a given underlying, organized by strike and expiration date, showing bid/ask, IV, volume, and open interest.
BeginnerPut Option
An options contract giving the buyer the right to sell the underlying asset at the strike price before or on expiration.
BeginnerPut-Call Parity
The no-arbitrage relationship linking the prices of a European call and put at the same strike and expiry: C − P = S − K·e^(−rT).
AdvancedVertical Spread
An options strategy involving the simultaneous buy and sell of two options of the same type and expiration but at different strikes, limiting both risk and reward.
Intermediate