Strike price

strikeexercise pricestruck
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.wikipedia
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Option (finance)

optionsoptionstock options
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.
In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date, depending on the form of the option.

Call option

callcallscall options
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.
The buyer of the call option has the right, but not the obligation, to buy an agreed quantity of a particular commodity or financial instrument (the underlying) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price).

Put option

putput optionsputs
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.
If the underlying stock's market price is below the option's strike price when expiration arrives, the option owner (buyer) can exercise the put option, forcing the writer to buy the underlying stock at the strike price.

Moneyness

in the moneyin-the-moneyout-of-the-money
Moneyness is the value of a financial contract if the contract settlement is financial.
In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option.

Derivative (finance)

derivativesderivativefinancial derivatives
The strike price is a key variable in a derivatives contract between two parties.

Binary option

binary optionsdigital optionAll or nothing option
For a digital option payoff is 1_{S\geq K}, where 1_{\{\}} is the indicator function:
In these, S is the initial stock price, K denotes the strike price, T is the time to maturity, q is the dividend rate, r is the risk-free interest rate and \sigma is the volatility.

Option time value

time valuevalueintrinsic
As shown in the below equations and graph, the intrinsic value (IV) of a call option is positive when the underlying asset's spot price S exceeds the option's strike price K.

Intrinsic value (finance)

intrinsic valuefundamental valueintrinsic values
The intrinsic value for an in-the-money option is calculated as the absolute value of the difference between the current price (S) of the underlying and the strike price (K) of the option.

Finance

financialfinancesfiscal
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.

Security (finance)

securitiessecuritydebt securities
In finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.

Spot contract

spot pricespotspot rate
The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium.

Underlying

underlying instrumentunderlying assetunderlier
Where the contract requires delivery of the underlying instrument, the trade will be at the strike price, regardless of the market price of the underlying instrument at that time.

Indicator function

characteristic functionmembership functionindicator
For a digital option payoff is 1_{S\geq K}, where 1_{\{\}} is the indicator function:

Options backdating

backdatingbackdated stock optionsbackdating of stock options
This is a way of repricing options to make them valuable or more valuable when the option "strike price" (the fixed price at which the owner of the option can purchase stock) is fixed to the stock price at the date the option was granted.

Interest rate cap and floor

interest rate capcaps and floorsinterest rate caps
An interest rate cap is a type of interest rate derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price.

Option style

American optionEuropean call optionAmerican options
Where an American and a European option are otherwise identical (having the same strike price, etc.), the American option will be worth at least as much as the European (which it entails).

Options spread

option spreadspread tradingcall spread
A spread position is entered by buying and selling equal number of options of the same class on the same underlying security but with different strike prices or expiration dates.

Put–call parity

put-call parityPut call parityarbitrage bounds on option prices
In financial mathematics, put–call parity defines a relationship between the price of a European call option and European put option, both with the identical strike price and expiry, namely that a portfolio of a long call option and a short put option is equivalent to (and hence has the same value as) a single forward contract at this strike price and expiry.

Options strategy

Options strategiesoption tradingOptions trading
Call options, simply known as calls, give the buyer a right to buy a particular stock at that option's strike price.

Options arbitrage

Conversion (options)Reversal
The call and put have the same strike value and expiration date.

Madoff investment scandal

Madoff scandalMadoff fraudBernard L. Madoff Investment Securities LLC
"Typically, a position will consist of the ownership of 30–35 S&P 100 stocks, most correlated to that index, the sale of out-of-the-money 'calls' on the index and the purchase of out-of-the-money 'puts' on the index. The sale of the 'calls' is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the 'calls'. The 'puts', funded in large part by the sales of the 'calls', limit the portfolio's downside."

Low Exercise Price Option

an acronymLEPO
A Low Exercise Price Option (LEPO) is an Australian Stock Exchange traded option with a low exercise price that was specifically designed to be traded on margin.

Volatility smile

volatility surfacevolatility skewImplied volatility surface
In particular for a given expiration, options whose strike price differs substantially from the underlying asset's price command higher prices (and thus implied volatilities) than what is suggested by standard option pricing models.

Rational pricing

risk neutral valuationrationalityunder Rational pricing
Thus, in a correctly priced derivative contract, the derivative price, the strike price (or reference rate), and the spot price will be related such that arbitrage is not possible.