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Strike Price

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The strike price of an option is the price at which the owner of the option is entitled to exercise his option to buy or sell the underlying security or asset. The strike price of a call option represents the price at which the underlying security or asset can be purchased by exercising such option prior to its expiration. On the other hand, the strike price of a put option represents the price at which the underlying security or asset can be sold by exercising such option prior to its expiration. The strike price is also called the exercise price. The strike price determines the intrinsic value of an option. The premium of an option will vary significantly depending on the strike price. A strike price is typically set at regular intervals around the current market price.



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