Strike Price

The strike price (or exercise price) of an option is the price per share at which the owner of the option can buy (call option), or sell (put option), the underlying security.

Overview Structured Data Issues Contributors

Other attributes

Wikidata ID

Q1929310

Introduction

The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium.

Setting the strike price

When granting employee options, the company sets the strike price at the fair market value of the company. An important factor in determining the fair market value is a value recommendation given by a third party firm called a 409A valuation.