How Does the Strike Price Impact the Value of a Crypto Call Option?
The strike price is the price at which the option holder can buy the underlying learn. For a call option, a lower strike price makes the option more valuable, as it allows the holder to buy the asset cheaper.
If the strike price is far below the current market price, the option will have higher intrinsic value and a higher premium.
Glossar
Call Option
Entitlement ⎊ The core of a call option within cryptocurrency derivatives represents a contractual right, but not an obligation, to purchase a specified digital asset at a predetermined price, known as the strike price, on or before a specific expiration date.
Lower Strike Price
Strike Placement ⎊ A Lower Strike Price for a call option makes the contract more likely to be in the money or closer to the money, resulting in a higher intrinsic value component and consequently a significantly higher premium compared to options with strikes set further out.
Strike Price Impact
Valuation ⎊ The strike price impact on option valuation is fundamental, as it directly determines the intrinsic value component of the option premium.
Higher Intrinsic Value
Measure ⎊ Higher Intrinsic Value is a direct measure of an option's in-the-money status, quantified by the positive difference between the underlying cryptocurrency's spot price and the option's strike price.
Strike Price
Reference ⎊ The Strike Price is the predetermined reference level set at the contract's inception against which the underlying crypto asset's spot price is compared at expiration or exercise.