Exercise price of a call option

Options Strike Price, Exercise Price, Expiration Date

Options traders use terms that are unique to options markets. Understanding what terms like Strike Price, Exercise Price, and Expiration Date mean is crucial if you trade options. These terms appear often and have a significant effect on the profitability of an options trade.

Options Strike Price, Exercise Price, Expiration Date

When you buy a call option the strike price is the price at which you can buy the underlying asset. When you buy a put option the strike price is the price at which you can sell the underlying asset. As an option buyer the strike price is the price you get to buy or sell stock at for a call or put option respectively.

As an option buyer, you are paying a premium the cost of the option for the right, but not the obligation, to buy call option or sell put option an underlying asset at the strike price. If you choose to exercise that right then you are "exercising" your option. Exercising your option can be beneficial if the underlying asset price is above the strike price of a call option, or the underlying asset price is below the strike price of a put option.

Most options are not exercised, even the profitable ones. An option contract represents shares of stock, or other set amount for other assets. The strike price is the same as the exercise price.

The Exercise Price On A Call Option Is $30 And The | efulejeqih.web.fc2.com

Option contracts specify the expiration date as part of the contract specifications. For European style options, the expiration date is the only date that an in the money in profit options contract will be exercised. This is because European style options can't be exercised, or the position closed out, before the expiration date.

Error (Forbidden)

For US style options, the expiration date is the last date that an in the money options contract can be exercised. This is because US style options can be exercised on any day up to the expiration date. Options contracts that are out of the money not in profit on the expiration date will not be exercised, and will expire worthless premium paid is forfeited.

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Updated September 19, Edited by Cory Mitchell. Get Daily Money Tips to Your Inbox Email Address Sign Up.

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