Strike price

A strike price is the price stated in an option contract at which the underlying item is bought or sold. The concept is used to generate a profit for the holder of an option, usually in relation to the purchase or sale of stock. The amount of this profit is the difference between the strike price and the market price.

In a call option, the strike price is the price at which the buyer can acquire the underlying item from the seller. In a put option, the strike price is the price at which the seller can require the buyer to acquire the underlying item from the seller.

Similar Terms

The strike price is also known as the exercise price.