What is a strike price and how are they determined?
A strike price is the actual numeric value of the option. For example, a May option may have strike prices of 35, 40 and 45. Strike prices are determined when the underlying reaches a certain numeric value and trades consistently at or above that value. If, for example, ABC stock was trading at 39, hit a price of 40 and traded consistently at this level, the next highest strike may be added.
A strike price is the actual numeric value of the option. For example, a May option may have strike prices of 45, 50 and 55. Strike prices are determined when the underlying reaches a certain numeric value and trades consistently at or above that value. If, for example, XYZ stock was trading at 49, hit a price of 50 and traded consistently at this level, the next highest strike may be added.
