What is a fair strike price?


What is a fair strike price? The strike price or exercise price is how much an employee will pay to exercise one share of your company's stock. The strike price is determined by the Fair Market Value (FMV) at the time the options are granted.


Does strike price matter?

Even if you plan on selling the option before it expires, the strike price matters because it will play a big role in determining the price of your option.


Can strike price be changed?

The strike price of a bought or sold option cannot be changed once that option is traded. Rather, the strike price of the option is predetermined. The only way to change the strike price for a trade is to offset that trade and then buy or sell an option at a different strike price.


Is strike price negotiable?

A strike price usually isn't negotiable. That's because it's a fixed number based on the independent appraisal of a company share at that time. It is technically possible to grant options at a strike price different from the 409A. But it's not very common and comes with disadvantages.