How do strike prices work?
How strike prices work will depend on the type of option being used. There are two types of options contracts: calls and puts. If the option is a call, the underlying asset can be bought when it hits the strike price. If the option is a put, the underlying asset can be sold when it hits the strike price.
When the underlying asset in an options contract hasn’t met the strike price yet, the option is known as being out of the money. When it reaches the strike price, it is known as being at the money, and when it exceeds the strike price, it is in the money. The more the asset price moves beyond the strike price, the more profit is derived from the option.
It’s important to note that the options contract must reach the strike price on or before the expiration date in order to be exercised.