# What is Strike Price? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Funding  
> **Canonical Citation:** [https://spidits.com/startup-glossary/strike-price](https://spidits.com/startup-glossary/strike-price)

## Definition
The Strike Price (or exercise price) is the fixed price per share at which an employee has the right to purchase stock options in the future.

## Architectural Mechanics & Deep Dive
The Strike Price (or exercise price) is the fixed price per share at which an employee has the right to purchase stock options in the future.

## Industry Applications & Real-World Use Cases
Employee stock option exercise agreements

## Frequently Asked Questions

### How is the strike price determined?
It is set by the board of directors and must match the Fair Market Value (FMV) established by a 409A valuation.

### How do employees make money from options?
By buying shares at the strike price and selling them at a higher market value during an exit event.

## Related Terminology
- [esop](https://spidits.com/startup-glossary/esop)
- [409a-valuation](https://spidits.com/startup-glossary/409a-valuation)
- [fair-market-value](https://spidits.com/startup-glossary/fair-market-value)

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*From the SPIDITS AI Knowledge Base (300+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*