Asked by Shavona Prater on Jul 13, 2024
Verified
Striking price can best be defined as:
A) The act of buying or selling the underlying asset via the option contract.
B) The fixed price in the option contract at which the holder can buy or sell the underlying asset. Also the exercise price or strike price.
C) The last day on which an option can be exercised.
D) The change in the stock price divided by the change in the call price.
E) A feature included in the terms of a new issue of debt or preferred shares to make the issue more attractive to initial investors.
Striking Price
Also known as the exercise price, it is the price at which the holder of an option can buy (call) or sell (put) the underlying asset.
Option Contract
A financial contract giving the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a certain date.
Exercise Price
The specified price at which an option holder can buy (in a call option) or sell (in a put option) the underlying asset.
- Become familiar with the fundamental concepts and their importance in options trading, including strike price, expiration date, and intrinsic value.
Verified Answer
KL
Katie LernerJul 18, 2024
Final Answer :
B
Explanation :
The striking price, also known as the exercise price or strike price, is the fixed price specified in an option contract at which the holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset. This definition matches choice B.
Learning Objectives
- Become familiar with the fundamental concepts and their importance in options trading, including strike price, expiration date, and intrinsic value.