Options trading
Strike price
Definition
The fixed price at which the holder can buy the underlying (with a call) or sell it (with a put).
Example
Say a stock trades at $100. A call with a $95 strike lets you buy at $95, so it already holds $5 of value and might cost $7.00, while a $105 call holds none and might cost $2.00. The lower strike costs more but needs a smaller move to pay off; for puts the pattern flips, and higher strikes cost more.
Hypothetical numbers, for illustration only.
Also defined in
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