Strike Price
The fixed price you pay to buy shares when exercising your stock options.
Definition
The strike price (also called the exercise price) is the per-share price you pay to buy shares when you exercise your stock options. It is set at the fair market value (409A value) of the common stock on the date the options are granted. A lower strike price means more profit per share when you eventually sell. Strike prices only go up as the company raises more rounds and the 409A increases.
Why it matters
Your strike price is locked in at your grant date. Employees who join earlier get lower strike prices and therefore more upside per share. When evaluating an offer, the strike price (combined with share count) determines your potential profit.
Example
You receive options at a $3 strike price. If the company exits at $30/share, your profit is $27/share. A colleague who joined a year later with a $10 strike only makes $20/share. Earlier employees have a built-in advantage.