What Is a Strike Price? Options ITM, ATM and OTM Explained
The strike is an option's key parameter: the price at which you can buy or sell the asset. Here's what “in the money” and “out of the money” mean and how the strike affects the cost.
What it is
The strike is the exercise price of an option: the price at which a call buyer can buy the asset and a put buyer can sell it. The strike is set at purchase and doesn't change.
In the money and out of the money
Say a stock costs 100.
| State | Call | Put | Premium |
|---|---|---|---|
| In the money (ITM) | Strike 90 | Strike 110 | Higher |
| At the money (ATM) | Strike 100 | Strike 100 | Medium |
| Out of the money (OTM) | Strike 110 | Strike 90 | Lower |
Out-of-the-money options are cheap, but most often they expire worthless by expiration. A cheap premium doesn't mean low risk: it's easy to lose all of it.
How the strike is chosen
The farther the strike is from the current price, the more the price has to move for the option to pay off. The basics are in the options lesson and the article options explained simply.
Aspiro Trade — signals on 45 assets, each with an entry, take-profit and stop-loss included. First month free.
- The strike is the exercise price of an option.
- The further out of the money, the cheaper it is and the less often it pays off.
- A cheap option is easy to lose entirely.
Frequently asked questions
Can I change the strike after buying?
No. You can only sell this option and buy another one with the strike you need.
What happens to an out-of-the-money option at expiration?
It expires worthless. The buyer loses the premium paid.
Why are in-the-money options more expensive?
Their price already includes “intrinsic value” — the gain you could get by exercising right now.
Free Aspiro Academy
26 lessons on investing and trading from scratch: videos, practice in the Aspiro apps, quizzes and a certificate. Lesson texts are open without sign-up.