what's the formula for determining strike price intervals in options.?

Question

Suppose a range for a share is between 50 & 250. Then how we ll determine the strike price intervals for that scrip in options.

Answer 1

For equity options, the usual formula given by the Options Clearing Corporation (OCC) is

"Strike Price Intervals: 2-1/2 points for stocks trading below $25, 5 points for those trading from $25 to $200, and 10 points for those trading above $200."

However, the usually formula is not always used. Some lower priced stocks use $1 intervals. Strike prices may be adjusted due to splits, mergers, spin-offs, or special dividends. Finally, anyone can ask for an additional strike price to be added.

With all the exceptions any formula would be inaccurate some of the time. To get accurate information you need to get an options chain from reliable source, such as the CBOE, and extract the strike prices from the results. The URL you can use to get option chains from the CBOE is

http://www.cboe.com/DelayedQuote/QuoteTable.aspx

Answer 2

Strike Price Formula

Answer 3

Physical Settlement
When an option that is physically settled is exercised, the option
holder buys
(with call options) or sells (with put options) the underlying asset
from the
option writer at the strike price. With physical settlement the
underlying
asset or security actually changes hands, and a payment (in the amount
of the
strike price) for the asset is also exchanged.

Some examples of physically settled options are: stock options,
currency
options, bond options, commodity options, and futures options.

Cash Settlement
When a cash settled option is exercised the option holder will receive
a cash
payment which is determined by a formula. The formula for determining
the
settlement of an index call option is:
Exercise-settlement amount = (Closing index level on day of exercise -
Strike
price) x Multiplier x # of contracts.

Some examples of cash settled options are: index options, interest rate
options, and swaptions.

Settlement Type *
Physical Cash
Stock Options Index Options
Commodity Options Interest Rate Options
Bond Options Swaptions
Currency Options 3-D Currency Options
Futures Options
* This table shows the typical type of settlement of several types of
options,
however there are some exceptions. For contract specifications visit
the
"products" link on the options exchange the contract trades on.