---
title: "What Is Strike Price?"
term: "Strike Price"
description: "Strike price is the fixed per-share price at which an option or warrant can be exercised—the cost to convert the option into actual stock."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["equity"]
source: https://venturecapitaltracker.com/glossary/strike-price
---

# What Is Strike Price?

> Strike price is the fixed per-share price at which an option or warrant can be exercised—the cost to convert the option into actual stock.

The **strike price** (or exercise price) is what you pay per share when you exercise stock options.

## How it works

When the board grants options, it sets strike price at or above fair market value on the grant date—usually from a **409A** valuation in the US. If the company grows and the market value rises above the strike, the option has intrinsic value. ISOs and NSOs differ in tax treatment, but strike mechanics are the same.

Warrants in venture financings also specify a strike; sometimes it resets in down rounds via repricing or exchange offers.

## Why it matters

- **Founders:** Low strike on early grants rewards early team; later hires get higher strikes reflecting progress.
- **Operators:** Incorrect 409A or backdated strikes create tax and legal exposure for employees and the company.

## Common mistake

Thinking strike price equals company valuation. Valuation is enterprise-level; strike is per-share FMV on a specific date.

## Related ideas

409A valuation, option pool, vesting, and fair market value.
## When you will see it

Every option grant notice lists strike price and grant date—employees should understand spread versus current 409A, not just headline grant size.

## Questions to ask

- When was the last 409A refresh relative to this grant?
- Can early employees early-exercise to start capital-gains clock?
- Do down rounds trigger repricing or exchange offers?
## Practical takeaway

Treat **strike price** as something to define precisely in writing—not assume everyone in the room shares the same meaning. In term sheets, board decks, and LP updates, tie the concept to a concrete decision: a vote, a price input, a fund policy, or a metric formula. When definitions drift, teams misprice risk, miss leverage, or waste cycles on the wrong conversation.

## FAQ

### What is strike price in simple terms?

Strike price is the fixed per-share price at which an option or warrant can be exercised—the cost to convert the option into actual stock. It is a label you will hear in deal conversations, cap tables, and fund marketing—not abstract theory.

### Why does strike price matter?

Founders and operators set strike prices via 409A valuations and board approvals for option grants. Operators use it when modeling equity, planning hires, or explaining economics to the team.


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Source: https://venturecapitaltracker.com/glossary/strike-price