The exercise price of an option:
A) varies with changes in the market price of an underlying share
B) remains fixed for the duration of the option.
C) is always at a price below market price when issued.
D) All of the given answers are correct.

Question

Quizplus · Accepted Answer

The exercise price, also known as the strike price, is the price at which the option holder can buy or sell the underlying security. This price is fixed for the duration of the option and does not vary with changes in the market price of the underlying share. A and C are incorrect because the exercise price does not necessarily need to be below the market price when issued.

The Exercise Price of an Option