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StrikePriceDefinition|Investopedia

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Astrikepriceisthepriceatwhichaspecificderivativecontractcanbeexercised.Strikepricesismostlyusedtodescribe
stockandindexoptions,inwhichstrikepricesarefixedinthecontract.Forcalloptions,thestrikepriceiswherethe
securitycanbebought(uptotheexpirationdate),whileforputoptionsthestrikepriceisthepriceatwhichsharescanbe
sold.
Thedifferencebetweentheunderlyingsecurity'scurrentmarketpriceandtheoption'sstrikepricerepresentstheamountof
profitpersharegainedupontheexerciseorthesaleoftheoption.Thisistrueforoptionsthatareinthemoneythe
maximumamountthatcanbelostisthepremiumpaid.
Alsoknownasthe"exerciseprice."
NextUp
1.BullCallSpread
2.MarketValue
3.Option
4.Exercise

BREAKINGDOWN'StrikePrice'
Strikepricesareoneofthekeydeterminantsofthepremium,whichrepresentsthemarketvalueofanoptionscontract.Otherdeterminantsincludethetimeuntil
expiration,thevolatilityoftheunderlyingsecurityandprevailinginterestrates.Strikepricesareestablishedwhenacontractisfirstwritten.Moststrikepricesarein
incrementsof$2.50and$5.
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