What is the difference between strike price and exercise price?

Strike price and exercise price are often used “interchangeably ” to denote the same: the price at which a derivative contract (e.g., an option) is “struck” and can be exercised by the holder (the buyer, the long) at or before its expiration date. For an option, it refers to the price at which the underlying asset may be bought or sold.

What is the difference between a strike price and a put option?

For call options, the strike price is where the security can be bought by the option holder; for put options, the strike price is the price at which the security can be sold. An option's value is informed by the difference between the fixed strike price and the market price of the underlying security, known as the option's "moneyness."

What is exercise price in options trading?

"Exercise price" is a term used in derivatives trading. A derivative is a financial instrument based on an underlying asset. Options are derivatives, while the stock, for example, refers to the underlying security. In options trading, there are calls and puts and the exercise price can be in the money (ITM) or out of the money (OTM).

What is the difference between strike prices and strike widths?

The distance between strikes is known as the strike width. Strike prices and widths are set by the options exchanges. Generally, strikes $1.00 apart are the tightest available on most stocks. Due to stock splits or other events, you may have strikes that result in $0.50 or tighter.