What Is a Strike Price?
By OptionsPriceCalculator Team · Published October 7, 2026 · Updated October 7, 2026
The strike price (or exercise price) is the fixed price at which an option lets its holder buy (for a call option) or sell (for a put option) the underlying asset. It’s set when the contract is created and never changes during the option’s life - the stock price simply moves around it, and where it lands relative to the strike is what decides whether the option finishes in or out of the money.
How the Strike Decides Moneyness
Every strike sits in one of three states relative to the current stock price, and that state - called moneyness - drives how expensive the option is and how closely it tracks the stock.
| Status | Call strike vs. AAPL $335 | Put strike vs. AAPL $335 | Behavior |
|---|---|---|---|
| In-the-money (ITM) | $310 (below) | $360 (above) | Carries real value today; moves closely with the stock |
| At-the-money (ATM) | $335 (at) | $335 (at) | Maximum time value; decays fastest |
| Out-of-the-money (OTM) | $370 (above) | $300 (below) | Pure time value; cheap, expires worthless more often |
Reading It in Practice
Say AAPL trades near $335. A $340 call is OTM by $5 - the stock needs to rise before the strike has any intrinsic value. A $330 call on the same stock is already $5 ITM. Neither strike moves once you buy the contract; only the stock price moves, sliding the option between these states as expiration approaches.
Strike selection is the single biggest lever on a trade’s cost and odds. A deep ITM strike behaves almost like owning the stock outright - expensive, high delta, low time decay. A far OTM strike is cheap and leveraged, but needs a bigger move to pay off.
Strike Price vs. Spot Price
These two numbers are easy to mix up, but they move very differently:
- Strike price is fixed. It’s written into the contract and never changes, no matter what the stock does.
- Spot price (the current stock price) moves constantly - every trade, every second the market is open.
The gap between them is what you’re actually trading. A call’s intrinsic value only exists once the spot price rises above the strike; a put’s only exists once the spot price falls below it. Watching that gap, not either number alone, is what tells you whether an option is ITM, ATM, or OTM.
Where this is used
Related terms
See how moving the strike changes a real trade’s payoff: open the options calculator and drag the strike up or down.
This article is for educational purposes only and does not constitute financial, investment, legal or tax advice. Options trading involves substantial risk and is not suitable for all investors.