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I agree with everything you said except for this part: > "Not directly, no. Neither is health insurance, 401k, company provided meals or other benefits, but al

I agree with everything you said except for this part: > "Not directly, no. Neither is health insurance, 401k, company provided meals or other benefits, but all of these things are perceived by most to have at least some marginal value." Stock options are, 99% of the time, worth $0. Perks, benefits, retirement options, all have intrinsic monetary value.

abalone 10y ago
> Stock options are, 99% of the time, worth $0. They are also, 1% of the time, worth >$100K. Some people have a tough time valuing volatile assets and end up making statements like this.. "they're not really worth anything" or "treat them like they're $0". But it's utterly wrong to say they have no intrinsic monetary value. It's more correct to call them volatile assets -- or even more correctly, a risk-free (in terms of capital) option to purchase a volatile asset.
rconti 10y ago
In a startup, you may be right, though I suspect you chose 99% for hyperbole. Maybe it's more likely 80% of the time or 70% or 98.7%. In an existing public company, as someone pointed out, the value of the company should be captured by the stock price, according to the efficient market hypothesis. As such, if the price is just as likely to go down as to go up, this should mean that stock options are merely worthless 50% of the time. Before you get into your ability to choose the sale date (subject to trading windows). So really, unless your public company ONLY goes down from the date you start (excepting really weird scenarios where it goes up, but is always negative relative to your strike price during trading windows), you stand to make money from your options. Maybe not much, but something. And you can't LOSE money from them, unless you do something stupid related to taxes, or something stupid like buy-and-hold. (buy-and-hold for certain values of 'stupid'; I actually did this once in order to swing a lower tax rate and it happened to work, but I could have lost my proverbial shirt).
- gohrt 10y ago
  > efficient market hypothesis absolutely does not apply in private-company stock.
  - rconti 10y ago
    Absolutely. That's why I only mentioned it in reference to an existing public company. As I mentioned, in a private company, it could well be possible that 99% or 97% or whatever of stock options prove to be worthless.
deelowe 10y ago
I think this is the case of the startup world ignoring things outside their bubble. At most companies, options are issued are against stocks that pay dividends, vest at a discounted rate (sometimes $0), and are generally net positive. Yes, in the startup world it's basically like a kickstarter for total compensation, but that's "99% of the time" not how options are used/viewed and a specific silicon valley corner case.

abalone 10y ago

> Stock options are, 99% of the time, worth $0. They are also, 1% of the time, worth >$100K. Some people have a tough time valuing volatile assets and end up making statements like this.. "they're not really worth anything" or "treat them like they're $0". But it's utterly wrong to say they have no intrinsic monetary value. It's more correct to call them volatile assets -- or even more correctly, a risk-free (in terms of capital) option to purchase a volatile asset.

rconti 10y ago

In a startup, you may be right, though I suspect you chose 99% for hyperbole. Maybe it's more likely 80% of the time or 70% or 98.7%. In an existing public company, as someone pointed out, the value of the company should be captured by the stock price, according to the efficient market hypothesis. As such, if the price is just as likely to go down as to go up, this should mean that stock options are merely worthless 50% of the time. Before you get into your ability to choose the sale date (subject to trading windows). So really, unless your public company ONLY goes down from the date you start (excepting really weird scenarios where it goes up, but is always negative relative to your strike price during trading windows), you stand to make money from your options. Maybe not much, but something. And you can't LOSE money from them, unless you do something stupid related to taxes, or something stupid like buy-and-hold. (buy-and-hold for certain values of 'stupid'; I actually did this once in order to swing a lower tax rate and it happened to work, but I could have lost my proverbial shirt).

gohrt 10y ago
> efficient market hypothesis absolutely does not apply in private-company stock.
- rconti 10y ago
  Absolutely. That's why I only mentioned it in reference to an existing public company. As I mentioned, in a private company, it could well be possible that 99% or 97% or whatever of stock options prove to be worthless.

deelowe 10y ago

I think this is the case of the startup world ignoring things outside their bubble. At most companies, options are issued are against stocks that pay dividends, vest at a discounted rate (sometimes $0), and are generally net positive. Yes, in the startup world it's basically like a kickstarter for total compensation, but that's "99% of the time" not how options are used/viewed and a specific silicon valley corner case.