Strike Price
FundamentalsThe predetermined price at which an options contract can be exercised to buy (call) or sell (put) the underlying security. Strike selection determines the risk-reward profile of an options trade.
Related Terms
Options
Contracts that give the right (but not the obligation) to buy (call) or sell (put) a security at a specified price before a certain date.
Covered Call
An options strategy where a trader sells a call option against shares they already own, collecting premium income in exchange for capping upside potential at the strike price.
Protective Put
An options strategy where a trader buys a put option on shares they already own, creating a price floor that limits downside risk while preserving unlimited upside potential.
Debit Spread
An options strategy that involves buying one option and selling another at a different strike price for a net cost (debit).