Strike price – n : finance/accounting term; the price per share specified in an individual’s stock option at which the grantee (holder of the option) has the right to purchase stock from the company once that option vests.  The strike price for options is set by the company’s board of directors, and is adjusted from time to time for new options granted by the company. The strike price “locks in” an individual’s future purchase price for a given number of shares at the time that option in granted. Therefore, if the company succeeds and its success is reflected by a rise in its stock price, an individual option holder, once his/her grant vests, has the opportunity to purchase shares at a discount to the company’s then-current share price. On the other hand, if the company’s stock price drops over the vesting period, the option’s strike price will reflect a premium over the post-vesting stock price – a phenomenon known as the option being under water.

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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