Can someone explain stock options for me?

Re: Can someone explain stock options for me?

• smerka member

  

  March 2014

  I think this article explains them pretty well. http://money.cnn.com/magazines/moneymag/money101/lesson10/

  Report0 Reply
• hoffse member

  

  March 2014

  I don't know much about the tax-treatment of them... only that my firm has people that pretty much do that exclusively because it's complicated.  Make sure you understand the tax implications before exercising your options, and consult a tax attorney or CPA if you need to.

  
  

  It sounds like he got the stock option as part of his compensation package?  If so, I think people usually sit on the options and wait until the bitter end to exercise so that they can buy low for something that's worth more than the option price.  I'm pretty sure that strategy does funky things with income tax though, so again - please research it before buying.  Also be aware that if he buys that stock your family needs to be able and willing to lose every penny if the company goes under.  Not trying to discourage you - just do it with your eyes open if you are interested.

  
  

  My aunt had stock options in Apple when it was a start-up (yes, really).  She exercised her options right before they announced the original macbooks.  Poor timing with that one, but she did end up with several hundred thousand in gains from it after selling the stock back to Apple a few years later.  If the company is a good one, it can be incredibly lucrative.

  

  Report0 Reply
• vlagrl29 member

  

  March 2014

  My first husband would get stock options as a bonus sometimes instead of an actual bonus check.  It would be the stock that was his company obviously.  I honestly don't know much more than that.  He sat on them I'm sure.

  
  

  Report0 Reply
• bjlucas1 member

  

  March 2014

  Thank you all for the information. I have some more researching to do

  Report0 Reply