Hey I got some stock options today!

[Yossarian]

500 shares at a base price of $20, they vest gradually over the next 3 years. Not too bad I guess.

 

[Hector13]

well, what is the current price of your company's stock and how long till they expire?

 

[Zim Hosein]

3 year vest, nice

Congrats PipBoy! :beer:

 

[Yossarian]

Originally posted by: Hector13
well, what is the current price of your company's stock and how long till they expire?

$20 and 10 years.

 

[Rallispec]

how does a stock option differ from regular stock?

<-- knows nothing about stocks

 

[Bryophyte]

Originally posted by: Rallispec
how does a stock option differ from regular stock?

<-- knows nothing about stocks

Stock options are not the same as getting stock. Your employer sets a price that you can buy stock at, and when the price goes up, you can cash it out for the difference in cost. We have 65k in stock options, vesting over the next 4 years, but won't actually hold the stocks. We'll do a one-day trade for the difference in cost with nothing out of pocket. We currently have about 2500 bucks profit sitting there (1/5 of the options, cash out profit), we're waiting for the current price to edge up a bit so we can cash out and pay off some bills.

 

[petejk]

Well, you have to work at the company for 3 years
to be fully vested. You plan to be there for 3 years?

If the stock drops below $20.00, you options are worthless


PJ

 

[Bryophyte]

Originally posted by: petejk
Well, you have to work at the company for 3 years
to be fully vested. You plan to be there for 3 years?

If the stock drops below $20.00, you options are worthless


PJ

Yep, I know people who were given options back when the company stock was over 50/share. The stock is worth less than half that now. The options will expire before they can be exercised for profit, most likely. Sucks for them.

 

[Yossarian]

Originally posted by: petejk
Well, you have to work at the company for 3 years
to be fully vested. You plan to be there for 3 years?

If the stock drops below $20.00, you options are worthless


PJ

I probably will. At this point I'm too lazy to look for another job. True they'll be worthless if it drops below 20 but I have nothing to lose of course, and it's a good sign that the company likes me enough to give me an incentive to stick around.

 

[Mani]

Congrats. I got a buttload at 20, I think the stock's at around 31 today. But they vest soooo damn slowly.

 

[Ameesh]

congrats man!

 

[Hector13]

Originally posted by: petejk
Well, you have to work at the company for 3 years
to be fully vested. You plan to be there for 3 years?

If the stock drops below $20.00, you options are worthless


PJ

not at all. These options don't expire for 10 years... that is a long ass time. Even at a stock price of $20, your options (with a strike of $20) are probably worth $20-25 each (depending on the volatility of your companies stock). Time-value is huge for options with so much time to maturity. The problem is that there probably is not a very liquid market for options further than a few years out, so regardless of what they are "worth", it might be hard to sell them for another 4-5 years.

 

[Hector13]

Originally posted by: BigDan

Originally posted by: Rallispec
how does a stock option differ from regular stock?

<-- knows nothing about stocks

Stock options are not the same as getting stock. Your employer sets a price that you can buy stock at, and when the price goes up, you can cash it out for the difference in cost. We have 65k in stock options, vesting over the next 4 years, but won't actually hold the stocks. We'll do a one-day trade for the difference in cost with nothing out of pocket. We currently have about 2500 bucks profit sitting there (1/5 of the options, cash out profit), we're waiting for the current price to edge up a bit so we can cash out and pay off some bills.

when you say 65k in options, you mean that is the market value of the options or the notional of the underlying stock (ie, number of contracts * strike price)? If it is the latter, that doesn't really tell you much about how much profit you would make from selling them.

As for the "one-day trade", you can probably just sell the options themselves without ever worrying about exercising and sell the stocks.