exercise price

Definition

The specified price on an option contract at which the contract may be exercised, whereby a call option buyer can buy the underlier or a put option buyer can sell the underlier. The buyer's profit from exercising the option is the amount by which the spot price exceeds the exercise price (in the case of a call), or the amount by which the exercise price exceeds the spot price (in the case of a put). In general, the smaller the difference between spot and exercise price, the higher the option premium. also called strike price.

Use exercise price in a sentence

You may want to make sure that you know when the exercise price will come into effect so that you are prepared.

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After some deliberation we set the exercise price and waited to see how the chips would fall in this tumultuous market.

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A type of price which is specifically based on an option contract at which it may be activated in the presence of a buyer through call option so as to purchase the underlier is known as exercise price

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if-converted method graduated call writing