What does Strike Price mean? Read on to discover the definition & meaning of the term Strike Price - to help you better understand the language used in insurance policies.
Within the context of put and call options based on an index, the strike price is the price of the option that determines its value (or lack of value) at settlement. If a put option's strike price is above the index's settlement value, it is "in the money" in other words, has value. The opposite is true of call options that is, if a call option's strike price is below the index's settlement value, it is "in the money." When the strike price and the index's settlement value are the same, this is known as "at the money."
We hope the you have a better understanding of the meaning of Strike Price.