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Many thanks, Sydesigner
Here is an example:
You are given a strike price of $20 per share and decided to exercise your option. The stock is currently at $30 per share. You are now buying the stock at $20 per share. You now decide to immediately sell those shares and now make $10 per share gross profit.
All stock purchases and sale must be done through a broker.
Hope this helps.
Here are some resources to check out that have covered this well:
* Rand wrote a great post (http://moz.com/rand/understanding-stock-options-at-startups-...)
* Solid overview: http://www.danshapiro.com/blog/2010/11/how-much-are-startup-...
* This is a good book that doesn't get enough love (http://www.amazon.com/Engineers-Silicon-Valley-Startups-eboo...)
* Good high-level notes about equity in startups (part of an incredible series, read it all if you can - http://blakemasters.com/post/21742864570/peter-thiels-cs183-...)
* Venture Hacks on the "Option Pool Shuffle": http://venturehacks.com/articles/option-pool-shuffle
Stock options state that you may exercise, essentially invoke, your right to buy a stock at a given price, also known as a strike price. If you have 100 options at a strike price of $20, you have the right to buy 100 shares at $20 per share regardless of current market value of the stock. Your options also may be subject to a vesting period. This means that after a given time you are given a certain amount or percent…
Not exactly. Maybe this isn't the same thing as an employer stock option. But a single call option, what I think you're referring to, gives you the right to buy 100 shares at x strike price. So 100 call options would be 10,000 shares at x price.
Stock options state that you may exercise, essentially invoke, your right to buy a stock at a given price, also known as a strike price. If you have 100 options at a strike price of $20, you have the right to buy 100 shares at $20 per share regardless of current market value of the stock. Your options also may be subject to a vesting period. This means that after a given time you are given a certain amount or percent…
>If you have 100 options at a strike price of $20, you have the right to buy 100 shares at $20 per share regardless of current market value of the stock Not exactly. Maybe this isn't the same thing as an employer stock option. But a single call option, what I think you're referring to, gives you the right to buy 100 shares at x strike price. So 100 call options would be 10,000 shares at x price.
Earlier quoted context omitted.
>If you have 100 options at a strike price of $20, you have the right to buy 100 shares at $20 per share regardless of current market value of the stock Not exactly. Maybe this isn't the same thing as an employer stock option. But a single call option, what I think you're referring to, gives you the right to buy 100 shares at x strike price. So 100 call options would be 10,000 shares at x price.
That is true for call and put options but employee stock options are not the same thing. A call or put option as you stated is for 100 shares per option contract. An employee stock option is the right to buy N number of shares at a strike price, not in blocks of 100 per contract.