What is the exercise price?
The training price is the price at which an option contract is concluded. It is a term used in investing when a person has secured an option contract and when this contract hits its strike price. The training price varies depending on the specific option.
The option is a contract that allows the buyer to buy something at a specified price. For example, shares are currently trading for $ 10 (USD) per share. A person could pay money for an option contract for the purchase of this share for $ 11 per share. The cost of this option would be based on the faith on the market, that shares will increase or more than $ 11 per share.
If the shares actually went to the share of $ 11, say at $ 12 per share, the buyer would apply his option and then make a profit because he could buy shares at a lower price than he was currently appreciated. He would buy shares for $ 11, although it was worth $ 12, ie an immediate profit from shares. Could also sell his possibleWed alone, and so sell someone else the right to buy shares for less than it cost.
When the individual buys the possibility, he only wants to perform it if he reaches the price of a "strike" or the price at which this option allows him to buy. For example, if he bought the opportunity to buy shares for $ 11 per share, but shares dropped to $ 9 per share, he would not want to take advantage of his possibility, because he would buy shares for 2 USD more than what was appreciated. Instead, he would have the opportunity to expire and lost only the initial money he has invested to buy the possibility. Most options expire during the specified period, usually a month, although some may be longer.
The price of the exercise is therefore the price at which the person actually applies his possibility or buys shares for the price of the promised Contact option. If a person bought an optical contract for the purchase of shares for $ 10, then the price for $ 10 would be $ 10. If the shares passed nAD of this exercise price of $ 10 per share, a contract would be applied and bought shares and reached its profit.