what is strike price in option

A strike price is a predetermined price at which an underlying security can be bought or sold by the option holder until the expiration date of the options contract. It is also known as the exercise price. The strike price is a key variable of call and put options, which defines at which price the option holder can buy or sell the underlying security, respectively. The relationship between the strike price and the price of the underlying asset determines whether the option is “in-the-money,” “at-the-money,” or “out-of-the-money” . The strike price is set by the exchange where the option trades when the options contracts get listed on that exchange. The price difference between the underlyings market price and the strike price determines an options value in what is known as the moneyness of the option.