What is Strike Price?

A strike price is the price at which an investor can exercise the right to buy or sell an underlying security in an options contract. The value of the strike price is set by financial exchanges, and may be a function of the underlying security's spot price, which is the market price of the security on the day the option is taken out. For example, suppose an investor purchases a $20 monthly call option to purchase bitcoin (BTC) at $75,000. As a result, the strike price of this contract is $75,000, meaning the investor can choose to exercise their option to purchase the cryptocurrency at this price before the month is up and the contract expires.