1. Strike Price: The Bull’s-Eye Scale of Options
Imagine you go to an amusement park to play a shooting game, and different numbers of rings on the target correspond to different prizes. The strike price is the ring number mark in the options world :
In-the-money : The inner ring that has been hit (Tesla is currently priced at $200, and the subscription price of 180 is in-the-money)
At-the-money : The red heart that just hits the line (current price = strike price, like the Bitcoin at-the-money option that jumps around $80,000)
Out of value : the outer ring that has not yet been reached (want to buy Tesla with $250? You have to wait for the stock price to soar)
Choosing an exercise price is like choosing a date - too conservative is boring, too radical is likely to be a disappointment, it is best to choose the one that is "within your reach".
2. US stock exercise price: art under the precise scale
Tesla's "5-dollar metaphysics" :
When the stock price is between $100 and $200, the exercise price interval is $5 (195/200/205…)
After the stock price broke through $500, the interval widened to $10
Unspoken rule : Market makers like to pile up orders at integer levels (such as $200) to form a natural barrier
Actual combat case : Before Tesla's financial report in April 2023, the stock price was stuck at $198 and would never reach $200. Smart money ambushed $200 call options in advance. After the financial report, the stock price rushed to $210, and this batch of contracts tripled in one week.
Veteran tips :
When the stock price is close to the integer mark, buy the out-of-the-money call (for example, buy 205 Call when the stock price is 198)
Avoid the "death middle price" (such as $197.5), as such contracts have poor liquidity and are easily harvested by market makers.
3. Bitcoin strike price: a numbers game in the Wild West
Coin Circle Features :
Mainstream exchanges set the exercise price in thousands of yuan (28,000/29,000/30,000…)
However, there are always platforms that use weird exercise prices (such as $31,234) to attract metaphysical players.
Magic Number Legend : In the 2021 bull market, options with an exercise price of "69,000" were snapped up, and as a result, Bitcoin collapsed instantly after reaching 69,000
Survival rules :
Don’t be held hostage by the psychological barrier (breaking 100,000 ≠ maintaining 100,000)
For large funds, choose a wide straddle type with a range of $5,000 above and below (anti-insertion)
Small funds play "asymmetric out-of-the-money" (such as buying 82,000 Call + 78,000 Put when the current price is 80,000)
4. The “Triple Personality” of the Strike Price
In-the-money options: Steady Uncle
Tesla 200 Call (current price 210): Intrinsic value $10, time value $2
Suitable for : Conservative investors/hedge funds
Disadvantages : Expensive, low leverage, like driving a tank on the road
At-the-money options: extreme sports enthusiasts
Bitcoin 80000Call (current price 80000): pure time value + volatility premium
Exciting point : Gamma is the largest, small wins big
Risk : Time value decays the fastest, like holding an ice cube
Out-of-the-money options: Lottery boy
Tesla 250 Call (current price 200): Premium $1.5, need to rise 25% to make money
Attractiveness : Starting from 10x leverage, most popular among retail investors
The cruel truth : 85% of out-of-the-money options expire at zero
We treat out-of-the-money options like fireworks—occasionally lighting a few for fun, but never filling our warehouses with gunpowder.
5. The “point-and-shoot camera” of strike price selection
Trending market :
Strong rise: Buy out-of-the-money 2nd tier call options
Plunge channel: Buy deep out-of-the-money puts
Volatile market :
Sell at-the-money wide straddle
Buy Butterfly Spread (for example, buy 29000Call + sell 30000Call × 2 + buy 31000Call)
Event-driven :
Before a major event: Buy at-the-money straddles (buy both ups and downs)
After the policy is announced: chasing virtual value and rising prices
Remember what the trader who made his first fortune with options said: "Finding the strike price is not a math problem, but a tightrope walk between market sentiment and probability."
6. Next Issue Preview
Tomorrow we will talk about "Time Value Decay of Options"
After-class tasks :
Find the strike price of Tesla's current stock price ±5% and calculate the increase/decrease required to reach these prices
Observe the distribution of Bitcoin strike prices on Deribit and find the three levels with the largest trading volume
Leave a message to share the most outrageous strike price setting you have ever seen
