Have you ever purchased an option of any kind?
What is the difference between the following:
A. I receive 100,000 in salary. I purchase an option to buy 10,000 shares of X at 5.00. The option costs me $25,000. The option expires in one year.
B. I receive $75,000 in salary plus an option to buy 10,000 shares of X at $5.00. The option expires in one year.
The stock is at 4.50 and stays there.
Under which case am I worse off?