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Re: skepticone post# 3251

Tuesday, 04/25/2017 12:21:25 PM

Tuesday, April 25, 2017 12:21:25 PM

Post# of 6602
Let me explain. Two different types of options, employee options are a whole different story than the type of options we can publicly trade - like puts and calls.

Basically employee stock options are when employees are given the right to take company stock as a replacement to cash they would otherwise be paid, or when they are given stock as a bonus - or some combination of the two. Typically these options expire after a certain amount of time so it's within the employees control when they convert the options. Under most circumstances the employees benefit the most when they convert their options at a low market price.

Paying an employee in stock options gives them sort of a middle ground with more control than if they were simply paid cash and purchased the stock on the open market because of the timeline they can chose to convert their shares over. It's sort of like they are saving up their pay so that they can purchase company stock all at once when it's at a low value instead of having to constantly have their money deflating because the market price is sinking.

Here's a quote to help explain:

"There are quite a few differences between these two types of stock options. Firstly, the terms of employee stock options are not fixed while exchange traded options have standardized terms, with each contract usually representing 100 shares of the underlying stock. Secondly, employee stock options are not traded on exchanges whereas standardized options are traded on many exchanges in the United States. Finally, employee stock options generally are not transferable while standardized options are interchangeable and can be freely traded within the trading hours on any exchange that lists them."

http://www.theoptionsguide.com/standardized-options-vs-employee-stock-options.aspx

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