What Is Exercise Price (Strike Price)?
The exercise price, also known as the strike price, is the fixed amount an option holder must pay to buy a share when exercising their share options.
Exercise Price (Strike Price) Meaning
The exercise price, meaning, centres on the cost of converting options into real ownership. To define exercise price in practice, it is set when the option is granted and is often based on the company’s fair market value at that time. A clear exercise price (strike price) definition is essential because it determines the potential gain for the option holder: the lower the exercise price compared to the company’s future value, the greater the upside. In employee share schemes such as EMI or CSOP, the exercise price stands for the financial entry point into equity ownership.
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