Definition
The strike price, also known as the exercise price, is the fixed price at which the holder of an option can buy (for calls) or sell (for puts) the underlying asset. The relationship between strike price and current market price determines whether an option is in-the-money, at-the-money, or out-of-the-money.
Example
An option with a $100 strike price allows you to buy or sell the stock at $100, regardless of where the market price moves.
FAQ
What is Strike Price?
The predetermined price at which an option can be exercised.
Why is Strike Price important?
Strike Price helps investors evaluate options and make more informed decisions.
Related Terms
Call Option
A contract giving the holder the right to buy an asset at a specified price.
Put Option
A contract giving the holder the right to sell an asset at a specified price.
In The Money (ITM)
An option with intrinsic value that would be profitable if exercised immediately.
Out Of The Money (OTM)
An option with no intrinsic value that would not be profitable if exercised.