How to use company stock options. A stock option grant provides an opportunity to buy a predetermined number of shares of your employer's company stock at a pre-established price, known as the But stock option grants are a use-it-or-lose it proposition, which means you must exercise your options before the end of the expiration period.

How to use company stock options

Employee Stock Options Explained

How to use company stock options. But what do your options mean? In many cases, a "stock option" is exactly what it sounds like: the option to buy the company stock. We'll use the term "stock option" here to refer to non-qualified Employee Stock Options, or ESOs, which are the most common type of equity grant an employee might receive.

How to use company stock options


Does your new job offer stock options to you? For many it's a great incentive to join a new company. Google GOOG has to be the highest-profile example, with the legendary stories of thousands of original employees becoming multi-millionaires, including the in-house masseuse. Though employee stock options have lost a bit of their luster since the global financial meltdown -- being replaced more and more by restricted stock -- options still account for nearly one-third of the value of executive incentive packages, according to compensation consulting firm James F.

In fact, employee stock options peaked in popularity back in Just watch out for the ensuing tax bill. In some cases, you can exercise your options and then hold on to the stock for at least a year before selling them and pay a lower tax rate. Options have a bunch of tax consequences to consider. If you have questions about your stock options, ask an advisor. In spite of that fact that options can make millionaires out of masseuses, there are some downsides:.

Employee stock options can be an extraordinary wealth-builder. And that can be an option worth taking. Neda Jafarzadeh is a financial analyst for NerdWallet , a site dedicated to helping investors make better financial decisions with their money. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.

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Understanding Employee Stock Options December 03, , How stock options work Though employee stock options have lost a bit of their luster since the global financial meltdown -- being replaced more and more by restricted stock -- options still account for nearly one-third of the value of executive incentive packages, according to compensation consulting firm James F. This article appears in: Personal Finance , Retirement , Stocks.

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