Options mechanics
What is the Strike Price and how does it determine contract monetization thresholds?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
The strike price is the fixed price at which the option holder may buy (call) or sell (put) the underlying shares, serving as the threshold that determines intrinsic value at expiration.
How it works
Strikes are listed in standardized increments set by the exchange based on the underlying price level, and an option's moneyness is measured by comparing the stock price to this strike.
An example
An XYZ 45 put has intrinsic value only if XYZ trades below 45 at expiration; above 45 the put has zero intrinsic value regardless of remaining premium.
Risk & limitations
Choosing a strike too far from the current price for a short time frame drastically lowers probability of profit even though the premium may appear attractively cheap.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.