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Also known as: exercise price, grant price

Strike Price

ConceptualLegalOperations

Definition

Strike Price: Strike price is the price at which an option holder can buy shares. For tax purposes (IRC 409A), the strike price must be at or above fair market value when the options are granted. Lower strike prices mean more potential upside for option holders.

Example Usage

“My options have a $0.10 strike price, so if the company sells at $10 per share, I make $9.90 per share.”

Common Misconceptions

Strike price can be set anywhere. It must be at fair market value per 409A to avoid tax penalties.
Lower strike is always better. It can create higher tax liability when exercising.
Strike price changes with the company value. Once granted, your strike price is fixed.

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