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Investment
Strike Price
The fixed price at which an option contract allows you to buy or sell the underlying stock.
The strike price is set when the option is created. Options with strike prices close to the current stock price are called 'at the money'. Far-away strikes are 'out of the money' and cheaper but riskier.
It's the exact price written on the option ticket that decides whether the option is valuable or worthless.
Real world: A call option with a £100 strike price is 'in the money' if the stock is trading at £120. The same option would be worthless if the stock is at £90 when it expires.
💡 The strike price is the most important number on any option contract.