Strike Price

The strike price is the pre-agreed price written into an options contract. A call option gives you the right to buy the underlying at the strike; a put option gives you the right to sell at the strike. The strike never changes during the contract's life, even as the market price (the 'spot') moves around it.

How it works

Options are quoted as a chain of strikes around the current price. On the NSE, Nifty option strikes are listed at 50-point intervals, with dozens of strikes above and below the spot level so traders can pick exactly the price they want to bet on.

The relationship between strike and spot defines the option's 'moneyness':

- In-the-money (ITM): a call whose strike is below spot, or a put whose strike is above spot, has real exercise value. - At-the-money (ATM): strike roughly equals spot. - Out-of-the-money (OTM): the strike is on the unfavourable side; the option is pure hope and time value.

In India

Index options on Nifty and Bank Nifty are cash-settled, so you never actually buy the index. At expiry the difference between the closing level and your strike is settled in ₹. Single-stock options can be physically settled, meaning ITM positions can require you to take or give delivery of shares.

Lot sizes are fixed by the exchange (for example, Nifty trades in a defined lot, revised periodically by SEBI/NSE), so one contract controls a large rupee value.

Why it matters

Choosing a strike is the heart of an options trade. A far OTM call is cheap but usually expires worthless; a deep ITM call costs more but moves almost like the stock. New traders often buy the cheapest OTM weekly options and lose repeatedly, because the spot rarely travels far enough before expiry. A practical rule: the strike encodes both your view on direction *and* on how big and fast the move must be. Pick it deliberately, not just by what looks affordable.