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How Does the Strike Price Affect the Option Premium?

ITM options (favorable strike price) have higher premiums due to greater intrinsic value; OTM options have lower premiums.
Greeks.Live03.11.25

How Does the Strike Price Affect the Option Premium?

The strike price significantly affects the option premium. Options that are already 'in the money' (ITM) relative to the current market price will have a higher intrinsic value and thus a higher premium.

Options that are 'out of the money' (OTM) have a lower premium because they have no intrinsic value and a lower probability of becoming profitable.

What Is the Relationship between ‘Moneyness’ and Intrinsic Value?
Can an OTM Option Ever Have a Higher Time Value than an ITM Option?
How Does an In-the-Money Covered Call Differ from an Out-of-the-Money Covered Call?
What Is the Concept of “Extrinsic Value” and How Does It Relate to ITM Options?

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