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When purchasing an options contract, a trader is faced with two critical decisions — Which expiration date? And at which strike price? These two decisions have an enormous bearing on whether a trade will be profitable. Choose correctly, and you’ll be seeing green. But pick wrong, and your trade will result in a loss.

In this article, we take you through the basics of option strike prices and the factors you should consider when entering a trade.

What is an Option Strike Price?

We’ll preempt our discussion on selecting strike prices by going over options basics. If you already have a solid foundation of stock options knowledge, feel free to skip ahead, although it doesn’t hurt to brush up on the nuts and bolts. If you’re just starting out or need a refresher, you may want to consider checking out The Basics of Stock Options and Option Greeks for a more in-depth look. …

About

Leah Mathieson

Australian lawyer. Living in Asia. Writing about Law, Finance, Wall Street & Startups. Echelon-1.com

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