Strike Price

The strike price (also called the exercise price) is the pre-specified price at which the holder of an options contract has the right to buy (for a call option) or sell (for a put option) the underlying asset — regardless of the prevailing market price at the time of exercise or expiry. The strike price is fixed at the time the options contract is created and remains constant throughout the option's life. In relation to the underlying asset's current market price, strike prices are classified as: In the Money (ITM — strike favourable for immediate exercise), At the Money (ATM — strike approximately equal to current price), and Out of the Money (OTM — strike unfavourable for immediate exercise). In Indian F&O markets, NSE and BSE offer a standardised range of strike prices for Nifty 50 and Bank Nifty options — typically at intervals of 50 or 100 points for Nifty and 100 points for Bank Nifty, covering strikes both above and below the current index level. The choice of strike price determines the option's premium (deeper ITM options are more expensive; deep OTM options are cheaper but lower probability), the option's sensitivity to underlying price changes (delta), and the required capital for options trading strategies. For Indian options traders designing strategies — straddles, strangles, spreads, and iron condors — the selection of appropriate strike prices is the most important decision, directly determining the risk-reward profile, break-even points, and probability of profit at expiry.