Strike Price

The strike price is the specific price at which a derivative contract can be exercised. Strike prices are fixed for options contracts through the life of the contract. For call options, the strike price is the price at which the option holder has the right to buy the underlying. Similarly, for put options, the strike price is the price at which the underlying can be sold. Every option contract is exercised at the strike price which makes it an important element of the option contract.

The difference between the strike price and the spot price of the underlying determines the price or the premium of the option.