In the derivatives market, strike prices are used (often options). Derivatives are financial products that receive their value from the underlying asset, which is often another financial instrument. The strike price of call and put options is a critical consideration. A buyer of a call option, for example, would have the right but not the obligation to acquire the underlying assets in the future at the designated strike price. Similarly, a buyer of a put option has the right but not the obligation to sell the underlying at the strike price in the future.

The strike price, also called the exercise price, is the fixed price at which an option contract can be bought (in a call option) or sold (in a put option) when the option is exercised. It plays a crucial role in options trading, as it determines whether the option is "in the money" or "out of the money." For example, in a call option, if the underlying asset's current market price is above the strike price, the option is profitable and considered "in the money." In contrast, if the asset's market price is below the strike price, the option is not profitable and is "out of the money." Choosing the right strike price is essential for traders, balancing potential returns with associated risks.