Definition
The price at which an option lets its owner buy (for a call) or sell (for a put).
The story
A $50 call on a stock trading at $55 is "in the money": the right to buy at $50 is worth at least $5 a share. A $60 call on the same stock is "out of the money": right now, the right to buy at $60 isn't worth using. Traders pick strikes based on how far they expect a price might move.
Why markets watch it
Strikes with heavy trading can become prices that traders watch in the underlying market, especially near expiration.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms