Been trading for a while but still get confused about strike prices. I know it’s the price you can buy or sell at but how does it actually affect your profits?
Some people say pick strikes close to current price, others go way out. What’s the real difference here?
Blew $400 in my second month chasing far OTM strikes for those big payouts. Rookie mistake.
Those distant strikes almost never hit. Switched to trading within 0.5% of current price and my win rate shot up from 35% to 68%.
Staying close gives you wiggle room when the market doesn’t go your way.
Strike price determines your target for options trading. Choosing strikes close to the current market price generally offers better odds of success, though the payouts may be smaller. Opting for strikes that are further out can lead to bigger rewards, but the likelihood of winning decreases. I recommend sticking to strikes within 1-2% of the market price. It’s less about chasing high payouts and more about taking trades with a solid chance of success.
Strike price distance influences win rates and payouts.
• ATM strikes: 70-80% win rate, 60-85% returns
• OTM strikes: 20-40% win rate, 200%+ returns
For reliable profits, choose ATM strikes.
Strike price is your break-even at expiration. Choosing something close to the current market price often leads to more frequent wins, though payouts may be smaller.
If you choose strikes further out of the money, the potential returns can be larger, but the chances of success decrease. It’s a classic risk versus reward scenario.
Sticking with strikes near the current price feels more reliable than taking larger risks.
Strike price affects your payout. Made 73% on EUR/USD last week using tight strikes.