Strike Price (Exercise Price)
The fixed price at which an option can be exercised.
What is Strike Price (Exercise Price)?
Set when the contract is written. Whether the strike sits above or below the current price determines if the option is in, at, or out of the money, and how much of its premium is intrinsic value versus time value.
Strike Price (Exercise Price): a worked example
With the stock at $52, a $50 call has $2 of intrinsic value; a $55 call has none.
More terms in Securities & Instruments
Common Stock
An ownership share in a company, with voting rights and last claim on assets.
Preferred Stock
Equity with a fixed dividend and priority over common, usually without votes.
Bond
A loan to an issuer that pays interest and returns principal at maturity.
Coupon Rate
The bond's stated annual interest as a percentage of par.
Yield to Maturity (YTM)
The total annualized return if you buy today and hold to maturity.
Par Value (Face Value)
The principal repaid at maturity, conventionally $1,000 per bond.
Duration
A bond's price sensitivity to a 1% change in interest rates.
Credit Rating
An agency's assessment of an issuer's likelihood of default.