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News

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News

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US banks kick off Q3 earnings season on strong note

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Gold prices test new trading levels. What’s next?

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Strike price definition

In derivative pricing, the strike price is a barrier the underlying asset must cross for the contract to have intrinsic value. The underlying may be any asset – a stock, forex pair or commodity. In options trading, the strike price is the point at which an option becomes ‘in the money’. An option which does not cross its strike price expires worthless. Traders will not necessarily profit at any level beyond the strike price, because of the costs associated with buying the option.

Once an asset has crossed its strike price, either by going above it (for a call option), or below (with puts), the trader will profit from exercising their option. The further in the money the option is, the more profitable the contract becomes.

 

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