Your strike price (also called the exercise price) is what you pay per share to turn an option into a share you own. It is usually set at the fair value of the share on the grant date, so a lower strike from an early grant means more upside for you later. The gap between the current share value and your strike is your paper gain. If the company's value falls below your strike, your options are underwater and not worth exercising. Strike price also drives your tax: in India the difference between fair value on the exercise date and your strike is generally taxed as a perquisite when you exercise, and later gains are capital gains when you sell. So a low strike is good news twice, on upside and on cost. Tax rules and valuation methods change, so confirm the specifics with a CA before exercising.
3 resources, 1 India-specific, 2 link-checked.
The most thorough plain-language reference on vesting, cliffs, strike prices, and exercise windows. Read it once and stop being confused by your grant letter.
From Holloway by Holloway
Open holloway.com →A plain-language India primer on what an ESOP actually is, how vesting and exercise work, and how it is taxed.
From ClearTax by ClearTax
Open cleartax.in →A working glossary of the words on your cap table, from the company that stores most of them, so the jargon stops getting in the way.
From Carta by Carta
Open carta.com →The same ground, over in Raise money, our Starting Up track.
