Strike price
Principles of Finance glossary · Time Value of Money
Definition
The fixed price at which an option may be exercised.
Strike price in plain English
An option is a contract that lets you lock in a price to buy or sell something later, and the strike price is that locked-in price. For example, if you hold an option to buy a share at a $50 strike, you can pay exactly $50 for it no matter what the stock is actually trading at -- great news if the real price has climbed to $70, useless if it fell to $30. Think of it like a gift card that says '$50 buys this jacket'; the $50 printed on the card is the strike, and whether you use it depends on what the jacket costs at the register. You choose whether to 'exercise' (use) the option, so the strike is the fixed hinge the whole bet swings on.
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