The current price of a stock is $20. In 1 year, the price will be either $26

Question:

The current price of a stock is $20. In 1 year, the price will be either $26 or $16. The annual risk-free rate is 5%. Find the price of a call option on the stock that has a of $21 and that expires in 1 year. (Hint: Use daily compounding.)

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.