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 (S - K) + where S is the
final of the underlying, K is the strike and where

     [()^+(x)=\{^{x\ if\ x\geq 0}_{0\ otherwise}]

For a put option the corresponding payoff is (K - S) +

For a digital option [1_{S\geq K}] where 1{} is the indicator function.

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