What happens when a call option hits the strike price?
Call options are in the money when the stock price is above the strike price at expiration. The call owner can exercise the option, putting up cash to buy the stock at the strike price. Or the owner can simply sell the option at its fair market value to another buyer before it expires.
What is a strike price on a call?
The strike price of an option is the price at which a put or call option can be exercised. A relatively conservative investor might opt for a call option strike price at or below the stock price, while a trader with a high tolerance for risk may prefer a strike price above the stock price.
How do you choose strike price for call options?
Generally, if you are buying call options, a higher strike price results in a cheaper option and vice versa for put options. Setting a strike price depends on the amount of risk you want to take and how much you are willing to spend on purchasing the options.
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