Also called exercise price
Strike price
The price at which an option can be exercised. Its distance from the current price determines almost everything about how the option behaves.
Updated 2026-09-05
The strike is the price at which an option can be exercised. Its relationship to the current price is the single biggest determinant of how the option behaves and what it costs.
- In the money: exercising now would be profitable. The option has intrinsic value.
- At the money: strike and price are roughly equal. Time value is at its maximum here.
- Out of the money: exercising now would be pointless. The option is entirely time value, and it is a bet.
Out-of-the-money options are cheap for a reason that is easy to forget when the price looks small: most of them expire worthless. The low cost is not a discount, it is a correct price for a low probability. See delta, which doubles as a rough estimate of that probability.
See also
- Option — A contract giving the right, but not the obligation, to trade something at a set price before a set date. The buyer has the right and the seller has the obligation.
- Intrinsic and time value — Intrinsic value is what the option would be worth exercised right now. Everything else in the price is time value, and it decays to zero at expiry.
- Delta — How much an option's price moves for a one-dollar move in the underlying. It doubles as a rough probability of finishing in the money.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
