Define the “Strike Price” and Its Importance in Options Trading

The strike price, or exercise price, is the fixed price at which the option holder has the right to buy (Call) or sell (Put) the underlying asset. It is a fundamental term of the option contract.

The strike price determines whether an option has intrinsic value (ITM) or not (OTM/ATM) and is critical in calculating the option's potential profit or loss at expiration.