What Is Strike Price? Meaning & Example
Definition
The strike price is the set price at which an option holder can buy (call) or sell (put) the underlying asset. It determines whether an option has intrinsic value.
Related terms
An option is in the money when it has intrinsic value: a call with a strike below the market price or a put with a strike above it. ITM options cost more because of that built-in value.
Out of the Money (OTM)An option is out of the money when it has no intrinsic value: a call with a strike above the market price or a put with a strike below it. Its premium consists entirely of time value.
OptionAn option is a contract giving the buyer the right, but not the obligation, to buy or sell an asset at a set price before or on a certain date. Options can be used for income, hedging or speculation.
What is Strike Price?
The strike price is the set price at which an option holder can buy (call) or sell (put) the underlying asset. It determines whether an option has intrinsic value.
Can you give an example of Strike Price?
A call with a $100 strike lets the holder buy shares at $100 even if they trade at $110.