strike price

noun

Definition of strike price

: an agreed-upon price at which an option contract can be exercised

called also striking price

Examples of strike price in a Sentence

Recent Examples on the Web The Softbank deal values WeWork's stock at $19.19, but the strike price for employee options has been above $20 since early 2016. Stephen Gandel, CBS News, "Here's who's holding the bag for Adam Neumann's $1.7 billion WeWork payday," 24 Oct. 2019 That’s because these bonds have a uniquely Korean flavor — an incentive in the form of refixing clauses that allows an investor to negotiate a lower equity strike price whenever shares fall. Washington Post, "Hedge Funds Hurt by Seoul’s Too-Good-to-Fail Bonds," 21 Oct. 2019 In this case, some of the insiders exercised older options with strike prices in the $20 to $30 range and then immediately sold them, profiting in the difference between the strike and current prices. Erik Sherman, Fortune, "Some Tesla Insiders Are Using This Options Strategy to Pocket Huge Sums," 17 June 2019 CannTrust traded at about $3 Canadian on Friday, well short of Aceto’s strike price of $11.88 Canadian for his 1 million options. Michael Bellusci, BostonGlobe.com, "When CannTrust CEO lost his job, he also lost $6 million in options," 29 July 2019 Gerry Lemcke of Swiss Re, which offers parametric insurance against pandemics, flight delays and hurricane damage to coral reefs, sees it as working rather like derivatives in finance, which have a strike price. The Economist, "The future of insurance is happening without insurance firms," 20 July 2019 CannTrust traded at about $3 Canadian on Friday, well short of Aceto’s strike price of $11.88 Canadian for his 1 million options. Michael Bellusci, BostonGlobe.com, "When CannTrust CEO lost his job, he also lost $6 million in options," 29 July 2019 Gerry Lemcke of Swiss Re, which offers parametric insurance against pandemics, flight delays and hurricane damage to coral reefs, sees it as working rather like derivatives in finance, which have a strike price. The Economist, "The future of insurance is happening without insurance firms," 20 July 2019 Reflecting that, the strike price for the notes, or the level at which the notes would be fulfilled by a conversion into Tesla... Sam Goldfarb, WSJ, "Tesla Makes Record $920 Million Payment for Convertible Bond," 1 Mar. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'strike price.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of strike price

1972, in the meaning defined above

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The first known use of strike price was in 1972

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Cite this Entry

“Strike price.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/strike%20price. Accessed 7 Jul. 2020.

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More Definitions for strike price

strike price

noun

Financial Definition of strike price

What It Is

The strike price is the specified price at which an option contract can be exercised.

How It Works

Strike prices are fixed in the option contract. For call options, the option holder has the right to purchase the underlying stock at that strike price up to the expiration date. For put options, the strike price is the price at which the underlying stock can be sold.

For example, an investor purchases a call option contract on shares of ABC Company at a $5 strike price. Over the life of the option contract, the holder has the right to exercise the option and purchase 100 shares of ABC for $500. If the price of ABC shares rises to $10, the option holder can lock in a $500 profit by exercising the option because it allows him to buy shares at $5 and sell them for $10 in the open market.

Why It Matters

The strike price is one of the most important elements of options pricing. At the expiration date, the difference between the stock’s market price and the option's strike price represents the amount of profit gained by exercising the option.

Source: Investing Answers

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