Plain-English definitions, reviewed by an independent investor
Strike Price
The strike price is the fixed price at which an option lets you buy or sell the underlying stock.
The strike price is the fixed price at which an option lets you buy or sell the underlying stock.
(The preset exercise price in an option contract)
Why it matters
It defines whether an option is in or out of the money.
Common confusion
An option is only exercised when it pays to do so versus the market price.
Frequently Asked Questions
In the money?
A call is ITM when the stock is above strike; a put when below.
Strike vs spot?
Strike is the contract price; spot is today’s market price.