TYPES OF STRIKE PRICE

 

Types of Strike Price in Options Trading

In options trading, strike price is the fixed price at which you can buy (Call option) or sell (Put option) the underlying asset. Based on the current market price, strike prices are categorized into 3 main types.

️In the Money (ITM)

• Call Option: Strike price is less than the current market price.
  (You can buy at a lower price than market rate – profitable.)
• Put Option: Strike price is more than the market price.
  (You can sell at a higher price than market – profitable.)

📌 Example:
If stock price = ₹150

• Call Option at ₹140 = ITM

• Put Option at ₹160 = ITM

At the Money (ATM)

• Strike price is equal to or very close to the current market price.
• No real profit yet, but has potential.
• Most traded for high liquidity.

📌 Example:
If stock price = ₹150

• Call or Put Option at ₹150 = ATM

Out of the Money (OTM)

• • Call Option: Strike price is higher than market price.
    (Not profitable yet.)
  • Put Option: Strike price is lower than market price.
    (Not profitable yet.)

  📌 Example:
  If stock price = ₹150

  • Call Option at ₹160 = OTM
  • Put Option at ₹140 = OTM