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w w w . C a n d l e S t i c k F o r u m s . c o m
The Strike Price
www.CandleStickForums.com
The strike price is the price of a stock
or other equity specified in options
contracts .
www.CandleStickForums.com
The strike price is the price at which a
contract in options trading will be
delivered should the buyer choose to
execute it.
www.CandleStickForums.com
The strike price will be the price of
satisfaction of the options contract no
matter what the market price, also
called the spot price , is at the time.
www.CandleStickForums.com
Specifically, it is the price at which
owner of options can buy stock in case
of a call option or sell stock in the case
of a put option.
www.CandleStickForums.com
The strike price of an options contract
is also referred to as the exercise price.
www.CandleStickForums.com
When trading options on stocks the
trader carries out the same types of
fundamental and technical analysis
that he would when buying stocks or
selling stocks directly.
www.CandleStickForums.com
He will use Candlestick analysis to
gauge market sentiment and assess a
stock’s margin of safety and intrinsic
stock value in order to have a clear
view of the stock’s eventual value.
www.CandleStickForums.com
Using Candlestick patterns as a guide,
traders in the options markets seek to
anticipate if stocks are likely rise
above the strike price of available
options contracts or are likely to fall
below the strike price.
www.CandleStickForums.com
If the trader anticipates a rise in stock
price above the strike price he will
seek to profit by buying calls on the
stock at given strike price.
www.CandleStickForums.com
If he expects the stock price to fall he
will seek to profit by buying puts.
www.CandleStickForums.com
Buying calls gives the trader the right
to buy stock and buying puts gives the
trader the right to sell stock, in each
case at the strike price specified in the
contract.
www.CandleStickForums.com
In neither case of buying options does
the buyer have an obligation to buy or
sell.
www.CandleStickForums.com
It is the seller of puts or calls who
gains premiums for taking on the risk
of unanticipated, by him, changes in
stock prices.
www.CandleStickForums.com
Options contracts vary length. As the
contract runs its course the contract
will have intrinsic value and time
value.
www.CandleStickForums.com
The intrinsic value of the stock is the
difference between the current market
price or spot price and the strike price
of the contract.
www.CandleStickForums.com
The time value is what the market
consensus assigns a stock based upon
expected price movement between the
current date and the contract
expiration date.
www.CandleStickForums.com
As the time to contract expiration
becomes less so does the time value of
the contract.
www.CandleStickForums.com
Finding profitable investments in the
options markets takes the same sort of
attention to fundamental analysis and
technical analysis as does buying or
selling stocks directly.
www.CandleStickForums.com
To the degree that an options contract
has less time to run the fundamentals
become less important.
www.CandleStickForums.com
Technical analysis tools such as
Candlestick pattern formations ,
however, are always useful as they can
spot short term changes in market
sentiment.
www.CandleStickForums.com
They always have the potential when
coupled with Candlestick trading
tactics to lead to short term profits in
trading options on stocks or other
equities.

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The Strike Price