What is a strike price?

A strike price, also known as a grant price or exercise price, is the fixed cost that you’ll pay per share in order to exercise your stock options so you can own them. Your stock options give you the right to buy a certain number of shares of your company at a strike price that is outlined in your initial stock option grant.

What is a strike price of an option?

The strike price of an option is the price at which a put or call option can be exercised. A relatively conservative investor might opt for a call option strike price at or below the stock price, while a trader with a high tolerance for risk may prefer a strike price above the stock price.

What is the difference between strike price and spot price?

The difference between the strike price and the spot price determines an option's moneyness and greatly informs its value. An option's strike price tells you at what price you can buy or sell the underlying security before the contract expires. The difference between the strike price and the current market price is called the option's "moneyness."