What Is a ‘Strike Ladder’ in Options Trading?
A strike ladder, or strike price chain, is the list of available strike prices for a given option contract on an underlying asset, typically displayed by an exchange or broker. These strike prices are usually set at fixed intervals around the current market price of the underlying asset.
Traders use the strike ladder to select the specific option contract (strike price) that aligns with their market outlook, whether they are buying deep in-the-money or far out-of-the-money options.
Glossar
Strike Prices
Definition ⎊ Strike Prices represent the fixed price at which the holder of an option contract has the right, but not the obligation, to buy or sell the underlying cryptocurrency asset upon exercise.
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.
Exchange
Marketplace ⎊ An exchange functions as a centralized marketplace where buyers and sellers meet to trade financial instruments.
Fixed Intervals
Calibration ⎊ Fixed intervals, within cryptocurrency derivatives, represent predetermined assessment periods for parameters influencing contract pricing and risk models.
Available Strike Prices
Selection ⎊ Available strike prices represent the discrete set of prices at which an options contract can be exercised, dictated by the exchange or platform offering the derivative.
Strike Ladder
Structure ⎊ A specific options trading configuration involving the simultaneous purchase and sale of options contracts on the same underlying asset, where the strike prices are systematically spaced, creating a defined profit band.