What is an exercise price?

Posted on Monday, January 4th, 2010 at 4:02 am    

In exchange for services or as a form of compensation, stock options will be granted to both clients and employees. While these stock options do not have immediate cash value, they have an instrinsic value that materializes over the life of the stock option.

The value of that option for an employee or client is partially determined by the exercise price. This price, which is also known as the strike price, is the price at which an employee may purchase stock in the company at a future date. 

The value of this stock to an employee or client is usually equal to the difference between the exercise price and the market price at the time of purchase. This difference typically represents how much the employee or client can gain by selling the stock. 

If you or anyone you know has questions about your stock options, contact the Des Moines business transactions lawyers of LaMarca Law Group, P.C., at (877) 327-2600. 


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