exercise price

Exercise Price

The price at which the underlying security can be purchased (call option) or sold (put option). Determined at the time the option contract is formed and also known as the "strike price".

Notes:

The exercise price is the key to profiting from options. A difference between the fixed exercise price and the market price at the time the option is exercised is what gives it value. Generally, the greater the difference between the exercise and market price at the time an option contract is written, the higher the premium required to purchase the option.

See also: Adjusted Exercise Price, Call, Contract Size, Exercise, Option, Put, Strike Price

---

Exercise price

The price at which the security underlying an options contract may be bought or sold.

---

exercise price

The dollar price at which the owner of a warrant or an option can force the writer to sell an asset (in the case of a call option or warrant) or to buy an asset (in the case of a put option). The exercise price is set at the time the option is issued and, except for unusual instances that include warrants, remains constant until the option expires. A market price of an asset above, or expected to be above, an option's exercise price gives the option value. See also aggregate exercise price, step-up.