Stock Option Plans

 

Stock options are sold by one party to another, that give the option buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain period of time.

Owning a put option gives you the right to sell the stock at an agreed upon price. The quick answer is yes and no. Hold Your Stock Options Initiate an Exercise-and-Hold Transaction cash for stock Initiate an Exercise-and-Sell-to-Cover Transaction Initiate an Exercise-and-Sell Transaction cashless Hold Your Stock Options If you believe the stock price will rise over time, you can take advantage of the long-term nature of the option and wait to exercise them until the market price of the issuer stock exceeds your grant price and you feel that you are ready to exercise your stock options. Once your options expire, they are worthless.

Stock Option Basics

Jan 31,  · Options granted under an employee stock purchase plan or an incentive stock option (ISO) plan are statutory stock options. Stock options that are granted neither under an employee stock purchase plan nor an ISO plan are nonstatutory stock options.

Options are different from trading stock in a company because investing in an option does not involve taking an ownership stake of a company. There are two types of options: Owning a call option gives you the right to buy stock. If you sell a call option, you make money on the premium, but you promise to sell the stock if the option is exercised. Owning a put option gives you the right to sell the stock at an agreed upon price.

By selling a put option, you make money on the premium, but you must promise to buy the stock if the put option is exercised. This is similar to buying or short-selling a stock. You are betting that the price will rise or fall in the future. Owning stock and owning options have their benefits. Buying options is much cheaper than buying stock. Also the risk of owning an option is much smaller because you can only lose the small premium that was paid for that option.

By buying the expensive stock, you can lose much more money. Options give smaller investors the ability to invest in stock that is otherwise too expensive for them. Options also bring in a much higher percentage of return on the investment because of the smaller price of the option. The expiration period varies from plan to plan. Once your options expire, they are worthless. There are often special rules for terminated, retired, and deceased employees.

These life events may accelerate the expiration. Check your plan rules for details about expiration dates. There are usually special rules in the event you leave your employer, retire, or die. See your employer's plan rules for details. See Accepting and Declining Grants for details. The Summary page for stock option plans displays information about grant totals, unaccepted grants, and accepted grants. From this page, you can view detailed information about a particular grant, accept or decline unaccepted grants, exercise accepted grants, or estimate the gain on a particular grant.

You can view vesting schedule information, stock option details, and the option's current estimated value. The total value of exercisable options is equal to the previous business day's closing price minus the grant price multiplied by either the total options or exercisable options or 0, whichever is greater.

The actual value at exercise may vary. The vesting schedule is a schedule of dates on which you receive the right of ownership for a specific number of stock options awarded as part of a stock option grant. The vesting schedule for stock options is defined in the grant agreement you sign when you accept a stock option grant. For example, say you were granted 1, stock options on February 1, The vesting schedule may state that of the options will be vested on February 1, , another options will be vested on February 1, , another on February 1, , etc.

The expiration date is the date on which your agreement expires. It is the date, according to the terms of your grant agreement with your company and your company's stock plan, after which you can no longer exercise your grant.

Under certain provisions of the stock plan and grant agreement, such as a change in employment status, the expiration date may be accelerated. You can view a history of all transactions for your stock option plan for the past 10, 30, 60, 90, or days. Transactions appear in reverse chronological order, but you can also sort the list of transactions by transaction type, grant ID, grant date, or quantity.