The strike price on options is usually really low relative to fund raising valuations. It's not vastly different than an equity grant, at least in the cases where it matters (ie: good ones). I think everyone would prefer to just give actual equity, but the tax implications are pretty terrible for the recipient.

If the strike price isn't the current valuation, that's technically a taxable event. Probably no one will care because there is no liquid market to prove the valuation.