Strikeprisets

Strikeprisets, in financial terminology commonly referred to as the strike price or exercise price, is the fixed price at which the holder of an option can buy (call) or sell (put) the underlying asset when the option is exercised. The strike price is set at the time the option contract is issued and remains constant for the life of the option. It plays a central role in determining the option’s moneyness and value.

Moneyness describes the relationship between the strike price and the current market price of the underlying asset. A call option is in-the-money when the market price exceeds the strike price, at-the-money when they are about equal, and out-of-the-money when the market price is below the strike price. For puts, these relationships are reversed. The strike price also directly influences the option’s intrinsic value, which is the immediate exercise value, and its time value, which depends on future price movements and time to expiration.

In pricing models such as Black-Scholes or binomial models, the strike price is a key input alongside the current price, volatility, time to expiration, and risk-free rate. The strike price is also a focal point in practical contexts, such as employee stock options, where the grant or exercise price is often set as the grant date price.

See also: options, Black-Scholes model, intrinsic value, moneyness.