Strike price

In finance, the strike price (or exercise price) of an option is a fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.

Alternatively, the strike price may be fixed at a discount or premium.

The strike price is a key variable in a derivatives contract between two parties.

Where the contract requires delivery of the underlying instrument, the trade will be at the strike price, regardless of the market price of the underlying instrument at that time.

Since the option will not be exercised unless it is in-the-money, the payoff for a call option is also written as where A put option has positive monetary value at expiration when the underlying has a spot price below the strike price; it is "out-the-money" otherwise, and will not be exercised.