Strike Price Interval

A strike price interval is the gap between one available strike price and the next, for options on a given stock or index. A strike price is the fixed price at which an option lets you buy or sell the underlying stock if you exercise it. Exchanges don't list every possible strike; they list a ladder of them at set spacing, and the strike price interval is the size of each rung on that ladder.

The spacing is not random. Exchanges set it based on how expensive the underlying stock is, so that the strikes stay reasonably useful relative to the share price. A cheap stock trading around $20 might have strikes every $1 or $2.50, while a stock trading at $800 might have strikes spaced $10 or more apart. The general idea is that lower-priced stocks get tighter intervals and higher-priced stocks get wider ones, since a $2.50 gap matters a lot more on a $20 stock than on a $500 one.

The nuance that trips people up is that these spacing rules are exchange-set guidelines with exceptions, not a fixed universal formula, and they get revisited over time. Highly liquid, heavily traded names often get extra strikes added between the "standard" ones, so you'll sometimes see tighter intervals on popular stocks than the general guideline would suggest. New expirations may also start with wider spacing that narrows as the expiration gets closer and more strikes get added.

So when you look at an option chain and see strikes like 95, 100, 105, 110, the interval is 5. That number tells you how fine-grained your choice of strike is going to be — tighter intervals give you more precise control over things like how far in- or out-of-the-money you go, wider intervals force bigger jumps.