what s the difference between strike price and spot price 
the strike price of an option tells you the price at which you can buy or sell the underlying security when the option is exercised the spot price is another term used for the current market price of the underlying security the difference between the strike price and the spot price determines an option s moneyness and greatly informs its value the bottom linean option s strike price tells you at what price you can buy or sell the underlying security before the contract expires the difference between the strike price and the current market price is called the option s moneyness it s a measure of its intrinsic value in the money options have intrinsic value because they can be exercised at a strike price that s more favorable than the current market price for a guaranteed profit out of the money options don t have intrinsic value but they still contain extrinsic or time value because the underlying may move to the strike before expiration at the money options have strikes at or very close to the current market price and they re often the most liquid and active contracts in a name disclosure this article is not intended to provide investment advice investing in securities entails varying degrees of risk and can result in partial or total loss of principal the trading strategies discussed in this article are complex and should not be undertaken by novice investors readers seeking to engage in such trading strategies should seek out extensive education on the topic 