Strike price
In the context of
derivatives the
strike price of an option is a key variable in a financial contract between two parties. Typically an option has positive monetary value if an underlying
financial instrument (e.g. a
stock price,
interest rate or
inflation rate) has a value above (or below depending on the particular type of contract, but not both) the strike price.
In the context of a call option, the payoff is where S is the final of the underlying, K is the strike and where

For a
put option the corresponding payoff is
For a digital option where is the indicator function.