Options Strike Price

| December 8, 2011 | 0 Comments

An options strike price is a relatively simple term.

The strike price is the price which your underlying equity is sold or bought per the terms of your options contract.

For instance… you buy 1 Microsoft April $25 strike call option.

You now have the right (option) to exercise you option and buy 100 shares of Microsoft for $25 per share.

On the other hand… you sell 1 Microsoft April $25 strike call option.

You’re now forced, or have the obligation to sell 100 shares of Microsoft stock at $25 per share.

On the other hand, if you bought a Microsoft April $25 strike call option, you’d have the right to buy 100 shares of Microsoft stock at $25 per share.

So the strike price is the price per share that serves as the basis for anything that happens with the option contract.

Category: Options Trading Basics

About the Author ()

A former banking executive, Corey Williams is the Chief Options Strategist and co-editor of our well-known daily newsletter, Options Trading Research. Corey’s extensive experience with options goes all the way back to his days in corporate finance. It was this decade in banking where Corey discovered the most important skill an options trader can have– the ability to analyze a company or sector to determine its likely future direction. And now he’s brought this background, experience and love of options to Options Trading Research, the unique daily e-letter devoted exclusively to helping individual investors profit from the very lucrative options market.

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