what is strike price meaning in options trading?

@josiah_edem - 3 months ago - Forex Education

Hello members, I am trying to get into options trading and i still need more clarification on what a strike price is and if it is possible to have more than one strike prices for a contract.

@tiny_ox - 3 months ago

The strike price of an option contract is that market price that when reached, the option can be exercised. If the current market price of the underlying asset does not reach the strike price, the option contract is termed "out of the money" and cannot be exercised.

So, imagine you bought a call option for $10 premium, and the strike is 1.1700; you can only call/buy the underlying asset to yourself when the current market price has reached 1.1700 if not the contract will expire worthless, and you will make a $10 loss.

Let us assume the strike price of a contract you bought for $10 is $100 and then the current market price also gets to $100; in this case the contract is "at the money". By the time the current market price gets to $111 the contract is "in the money". This is because if you exercise the contract at $111 and subtract the $10 premium, you will still make a $1 profit.

@skyfall - 3 months ago

Strike price is like the price at which the option contract is awakened and can be used or exercised. As long as the market value of the underlying future has not reached the strike price, the option remains dormant and out of the money.