What Is A Strike Price

Strike price is part of an option contract which specifies the level at which the option holder may buy (call) or sell (put) the underlying asset. In order for the option to be worth anything, the share price must either be above (call) or below (put) the strike price, otherwise the option holder could get a better price in the market. Strike prices usually increase in amounts of $2.50 or $5.

Strike price is also referred to as exercise price.

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