What are "expiring" stock options?

[anandtechuser07]

I was given 500 stock options from my company when I joined last year. They are set to "expire" in a few weeks. What does this mean? My strike price was $40, but the stock is now at $31. What can I do?

 

[Jeff7181]

They're stock options that expire. If you don't "exercise" them, you lose the option to buy the stock at whatever price the stock option specifies. In other words... when they expire, you get nothing, ever.

 

[ChaoZ]

Let it expire, the stock price is lower than the option price.

 

[anandtechuser07]

But if I buy them now at the strike price, which is above the current price, I will have immediately lost money, right?

 

[Jeff7181]

Originally posted by: ChaoZ
Let it expire, the stock price is lower than the option price.

Yep... that's what I'd do. If it was a few percent I might buy simply because this is usually preferred stock that companies sell to employees. But an immediate 25% loss on the investment... no thanks.

 

[her209]

Originally posted by: anandtechuser07
But if I buy them now at the strike price, which is above the current price, I will have immediately lost money, right?

Yes. You're overpaying.

 

[Jeff7181]

Originally posted by: anandtechuser07
But if I buy them now at the strike price, which is above the current price, I will have immediately lost money, right?

That's right... the option contracts give you the right to buy the stock at the strike price... but you're not obligated to.

 

[spidey07]

Originally posted by: Jeff7181
They're stock options that expire. If you don't "exercise" them, you lose the option to buy the stock at whatever price the stock option specifies. In other words... when they expire, you get nothing, ever.

Yep, simple and to the point.

Your option price is 40, currently trading at 31. No need to exercise or do anything. UNLESS the stock split and your option price is really 20 after a split.

Contact your benefits department.

You have the OPTION of purchasing shares at the specified price, you EXERCISE these options by purchasing at that price. Options are always adjusted based on a split so more details are needed.

 

[erub]

Sounds like it would be pretty dumb to do anything at this point.

 

[DaWhim]

the options you have are worthless right now.

 

[anandtechuser07]

Thanks for the info. I may immediatley lose money know, but I am weighing that against the possibility that the stock price goes back above what I paid right? Why the hell do they have to impose this expiration date to make my life so stressed?

 

[Jeff7181]

Another little tidbit about stock options...

You can redeem them immediately... it's like buying at the strike price and immediately selling and taking the difference between the strike price and the current price of the stock. You don't need to spend any of your own money here, you just receive a check for the difference.

You can buy and hold... buy at the strike price, and hold the stock if you believe it's going up more. In this case, you have to cut a check for the amount of shares @ the strike price. Option contracts are for 100 shares of stock. So if you have one option contract, you'll buy 100 shares of the stock at the strike price. If you have 10 contracts, you'll be buying 1,000 shares of stock at the strike price.

 

[Jeff7181]

Originally posted by: anandtechuser07
Thanks for the info. I may immediatley lose money know, but I am weighing that against the possibility that the stock price goes back above what I paid right? Why the hell do they have to impose this expiration date to make my life so stressed?

If you're confident the price is going to go up, just let your options expire and open an account with a brokerage and buy the stock yourself.

 

[KnickNut3]

Shoulda sold some calls when you got 'em, monetize that shiznit.

2:15 in

 

[spidey07]

Originally posted by: anandtechuser07
Thanks for the info. I may immediatley lose money know, but I am weighing that against the possibility that the stock price goes back above what I paid right? Why the hell do they have to impose this expiration date to make my life so stressed?

Why? To encourage you to take employment. You're not losing anything, you're not out anything. It's an OPTION.

Based on your post, without any other information, why the hell would you purchase your option price ABOVE what it is currently trading at? That is losing money.

What are you risking??? You can purchase the stock at 31 today, or you can purchase the stock at your option price of 40. The choice is of course obvious.

Without knowing if you split or not or the details of your options it's difficult to really understand where you're at.

 

[anandtechuser07]

Originally posted by: spidey07

What are you risking??? You can purchase the stock at 31 today, or you can purchase the stock at your option price of 40. The choice is of course obvious.

Without knowing if you split or not or the details of your options it's difficult to really understand where you're at.

The stock did not split.

You are right. If the current price is below the strike price, then I might as well buy at the current price (if I do want to buy).

 

[Evadman]

Originally posted by: Jeff7181

Originally posted by: anandtechuser07
Thanks for the info. I may immediatley lose money know, but I am weighing that against the possibility that the stock price goes back above what I paid right? Why the hell do they have to impose this expiration date to make my life so stressed?

If you're confident the price is going to go up, just let your options expire and open an account with a brokerage and buy the stock yourself.

:thumbsup:

 

[spidey07]

Originally posted by: anandtechuser07

Originally posted by: spidey07

What are you risking??? You can purchase the stock at 31 today, or you can purchase the stock at your option price of 40. The choice is of course obvious.

Without knowing if you split or not or the details of your options it's difficult to really understand where you're at.

The stock did not split.

You are right. If the current price is below the strike price, then I might as well buy at the current price (if I do want to buy).

Another tip, don't invest into your companies stock as retirement income.

Company goes under you're out of a job, AND your retirement is screwed.

Why people invest in their primary source of retirement income into the same entity that controls their paycheck is beyond me. Shamefully a good many people do. Stupid knows no bounds when it comes to money.

 

[darkxshade]

An expiring stock option is a stock option that's expiring