Strike Price

The predetermined price at which the holder of an option can buy (for a call) or sell (for a put) the underlying asset. The relationship between the strike price and the current market price determines whether an option is in the money, at the money, or out of the money. Strike prices are set at standardized intervals by exchanges, and the choice of strike is one of the most important decisions in options trading, affecting the trade's cost, probability of profit, and risk-reward profile.