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Finance Dictionary and Glossary of Investment Terms
The specified price on an at which the contract may be exercised, whereby a buyer can buy the or a buyer can sell the underlier. The buyer's profit from exercising the option is the amount by which the exceeds the exercise price (in the case of a call), or the amount by which the exercise price exceeds the spot price (in the case of a put). In general, the smaller the difference between spot and exercise price, the higher the option . also called strike price.
See Strike Price
The price at which the security underlying a future or options contract may be bought or sold.