What is a Strike Price?
The strike price is the present fixed price at which employees can purchase stock options in the future. It represents the worth of shares based on the valuation of the company when the stock option was offered to the employee. Why is it useful? After the vesting schedule, the employee is allowed to exercise the stock options and purchase the shares at the strike – initial – price. This is very beneficial for the employee if the company increases in value during the vesting period: the employee has a high margin by paying a lower strike price for a share that has a higher worth.