Exercise price
The exercise price or strike price (also strike price of English strike price ) is an important component of options and other derivative financial instruments . It denotes the previously determined price at which the underlying can be bought or sold on the exercise date (expiry date, reference date). If it is a put option (or a derivative financial instrument with one of the put option same component, for example a Aktienanleihe ), as well as the term is tender price in use.
example
We are considering an option to purchase that will entitle the holder to purchase 100,000 barrels of oil on May 1, 2009 at a value of $ 43 a barrel. In this case, the strike price is $ 43. If the price of the oil is less than $ 43 per barrel on the reference date , the option is out of the money and worthless. If the underlying is equal to the exercise price, the option is at the money and also worthless. If the oil price on the reporting date is higher than the exercise price, the option is in the money . In this case, exercising the option is advantageous.