Or the ones that think animal entrails are the complete story. I was thinking that artwork was directed at me but realized you must have meant it in a self deprecating way...thanks for that, nice to see you can laugh at yourself.
There are basically three ways to exercise employer stock options. From Fidelity (as an example but NOT exclusive to Fidelity)...
Initiate an Exercise-and-Hold Transaction (cash-for-stock)
Exercise your stock options to buy shares of your company stock and then hold the stock. Depending on the type of the option, you may need to deposit cash or borrow on margin using other securities in your Fidelity Account as collateral to pay the option cost, brokerage commissions and any fees and taxes (if you are approved for margin).
The advantages of this approach are:
benefits of stock ownership in your company, (including any dividends)
potential appreciation of the price of your company's common stock.
NOTE: this is the option Thero chose and maximizes ownership and long term appreciation - bullish. The other options are much more likely (particularly #3) if he intended to sell as you inferred.
Initiate an Exercise-and-Sell-to-Cover Transaction
Exercise your stock options to buy shares of your company stock, then sell just enough of the company shares (at the same time) to cover the stock option cost, taxes, and brokerage commissions and fees. The proceeds you receive from an exercise-and-sell-to-cover transaction will be shares of stock. You may receive a residual amount in cash.
The advantages of this approach are:
benefits of stock ownership in your company, (including any dividends)
potential appreciation of the price of your company's common stock.
the ability to cover the stock option cost, taxes and brokerage commissions and any fees with proceeds from the sale.
Initiate an Exercise-and-Sell Transaction (cashless)
With this transaction, which is only available from Fidelity if your stock option plan is managed by Fidelity, you may exercise your stock option to buy your company stock and sell the acquired shares at the same time without using your own cash.
The proceeds you receive from an exercise-and-sell transaction are equal to the fair market value of the stock minus the grant price and required tax withholding and brokerage commission and any fees (your gain).
The advantages of this approach are:
cash (the proceeds from your exercise)
the opportunity to use the proceeds to diversify the
investments in your portfolio through your companion Fidelity Account.
