Strike price
Also called: strike, exercise price
The strike price is the fixed price at which an option lets its holder buy (for a call) or sell (for a put) the underlying stock.
Exchanges list options at a ladder of strikes around the current price. The distance between the strike and the stock price decides whether an option is in, at or out of the money.
Related terms
- Call option: A call option is a contract that gives its buyer the right, but not the obligation, to buy a stock at a set price (the strike) before or at a set date.
- Put option: A put option is a contract that gives its buyer the right to sell a stock at a set price (the strike) before or at a set date.
- In the money: An option is in the money when exercising it now would pay something: a call whose strike is below the stock price, or a put whose strike is above it.
- Out of the money: An option is out of the money when exercising it now would pay nothing: a call with a strike above the stock price, or a put with a strike below it.
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