The exercise price in an option contract is:
A) The price of the underlying instrument at the time of the transaction
B) The price at which the transaction on the underlying instrument will be carried out if and when the option is exercised
C) The price the buyer of the option pays to the seller when entering into the options contract
D) The price at which the two counterparties can close-out their position

Question

Quizplus · Accepted Answer

The exercise price in an option contract is the price at which the transaction on the underlying instrument will be carried out if and when the option is exercised. It is the predetermined price at which the option holder has the right to buy or sell the underlying asset.

The Exercise Price in an Option Contract Is