For a call purchased on an organized security exchange, the strike price specifies the
A) contractual price at which each of the shares of the underlying stock can be bought.
B) prevailing market price of one share of the underlying stock.
C) cost of buying one option contact based on the value of the underlying stock.
D) intrinsic value of the offsetting put.

Question

Quizplus · Accepted Answer

The strike price in a call option contract specifies the price at which the holder of the option can buy the underlying stock. This is a fixed price agreed upon at the time the option is purchased, allowing the option holder to buy the stock at this price regardless of the stock's market price at the time of exercise.

For a Call Purchased on an Organized Security Exchange, the Strike