What is Strike Price?
As defined by the OCC, the strike price, also known as the exercise price, is the price at which the option holder has the right to either purchase or sell the underlying interest. The exercise price (strike price) is generally set at levels above and below the market value of the underlying interest or asset (i.e. the underlying stock).
If you exercise a call option, you will pay the strike price to purchase 100 shares of the underlying security. If you exercise a put option, you will receive the strike price to sell 100 shares of the underlying security. A call option is considered in the money if the strike price is below the market price. A put option is considered in the money if the strike price is above the market price.
Depending on the price of the underlying security, strike prices can be expressed in $1 increments, $5 increments, or other values.