What does strike price mean?

The strike price is the price at which a contract will execute at .

strike price - what is the strike price

So selling the 860 Put means you’re selling someone the right to ‘put the stock to you at $860 per a share for 100 shares.

When you buy the $855 put in the above example you’re buying the right to put 100 shares of the stock to someone at $855..

The above example is a vertical spread – since we’re selling premium here / collecting credit and it’s a put spread – the position is net bullish.

Usually you would buy back the options before being exercised. A contract can be exercised at anytime – however because of ┬ámarket forces it’s very unlikely to be assigned if the option remains out of the money.