How Does an Oracle Verify the Strike Price Condition for a Derivatives Contract?

The oracle continuously feeds the real-time market price of the underlying asset to the smart contract. At the contract's expiration or a specific trigger time, the contract compares the oracle's reported settlement price to the pre-determined strike price.

If the condition (e.g. price is above the strike for a call option) is met, the contract executes the necessary asset transfer or cash payout automatically.