Home » Eng Finance » E » Exercise price

Exercise price

The price at which an option gives the right to buy or sell shares, commodities, or currencies, also referred to as the strike price. The option will be exercised only if this price is more favourable to the party holding it than the market price. A put option will only be used to sell assets if the exercise price is higher than the market price, and a call option will only be used to buy assets if the exercise price is lower than the market price.

Reference: Oxford Press Dictonary of Economics, 5th edt.