The strike price is the specified price which an option buyer

The strike price is the specified price which an option buyer

• A. May Buy Or Sell At The Basis
• B. May Buy Or Sell The Corresponding Commodity With A Futures Contract
• C. Is Set By The Exchange
• D. Is The Settlement Price

Answer: (B)

Strike price is the fixed price at which the option holder can exercise the option to take a position in the underlying asset. For options on futures, exercising means entering into a futures contract to buy or sell the underlying commodity at that strike price. So the strike price is the price you can buy or sell the corresponding commodity through the futures contract. It’s not the basis or the settlement price, and while the exchange provides the listed strike levels, the key idea is that the strike price is the exercise price for the futures position.

Strike price is the fixed price at which the option holder can exercise the option to take a position in the underlying asset. For options on futures, exercising means entering into a futures contract to buy or sell the underlying commodity at that strike price. So the strike price is the price you can buy or sell the corresponding commodity through the futures contract. It’s not the basis or the settlement price, and while the exchange provides the listed strike levels, the key idea is that the strike price is the exercise price for the futures position.