In options, what is strike price?

Answer 1

When you buy or sell an option, there is a price associated with the option at which the purchaser can exercise the option. Let's take an example. The stock is selling at 39 a share. The option is to buy the stock at 40. That is the strike price. That option allows the purchaser to purchase the stock at 40 a share reguardless of what price the stock may actually be selling for. That option my be selling at $1.00 a share or more or less depending on how many days are left until the option expires. If the stock rises to over 40 a share, the the option is said to be in the money. That means that it now has some real value. If the stock price rises to over 41 a share and you purchased the option a 1, then you have a profit on the option. There are two different types of options call options giving the purchaser the right to buy the stock at a particular price and put options giving the purchaser the right to sell the stock at a particular price.

Answer 2

Let me give a sample quote of option,
1984 SeptmeberIBM 180 at 4.
This means the IBM option expiring in September 1984 with a strike price or expiration day price of 180 is quoted with a price at $4. 180 is the strike price which means the price of the IBM on the expiration day is going to be 180. On this expiration day price or strike price different players make their bet either in both sides of it. If one feels on expiry the price is going to be lesser then they will write calloption or if someone feels it is going to be higher than 180 then they will buy call option. Similary if one feels it is going to be much lower than 180 they can buy putoption or if someone else feels it is goig to go higher then they can write putoption. So strike price is the number around which or the price around which the bet is made or the market participants wager their position.