O'Connor: The ins and outs of employer-granted stock options
Many companies offer their employees benefit programs that include everything from medical insurance to a 401(k) retirement plan. But, as an employee of a publicly-traded company, you may also have another benefit that could prove to be extremely valuable. For the first time in your career, you could have access to employer-granted stock options.
A stock option is the right to purchase a company's stock in the future at a fixed price. When you exercise an option, you purchase shares of the company's stock directly from the company at the grant price, a price set by the company at the time the stock option grant is made.
The timing and strategy used when exercising stock options is tied to four primary variables: vesting, expiration, taxes and stock price. While you may be able to make big profits on your options if the stock price appreciates substantially beyond the grant price you will pay, there are other things like vesting schedules, expiration dates and the rules guiding the various types of options you may want to consider before taking any leaps.
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