Startup Terms Glossary
What is Exercise Price?
The exercise price, or strike price, is the amount at which a shareholder can buy or sell derivatives with trading options. Derivatives are financial products or contracts that have values based on underlying assets. The exercise price is pre-determined and set at intervals.
Exercise Price Examples
Examples of the points involved in an exercise price-based purchase:
- Point 1. Buyer and seller of an option enter into an agreement
- Point 2: Buyer has the right to sell short a specified number of shares
- Point 3: Buyer profits if stock price dips below the option exercise
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