let me augment this with a real world example of why knowing about stock options is important for those cases where you need to understand why _not_ to exercise

let me augment this with a real world example of why knowing about stock options is important for those cases where you need to understand why _not_ to exercise. recently I left a company after 3 years, with a decent chunk of options in my comp. the company is not publicly traded, is still deep in the red, is still trying to raise more rounds of venture capital (thus increasing dilution), and has no exit in sight for the foreseeable future. My cost to exercise my options at their strike price would have been just over $8000 bucks, and then there would be additional taxes on top of that for whatever the face value of the purchased shares would be. These are illiquid assets, mind you, so the face value would be taxed, but there were no buyers, so it's just an outright loss. I left those options unexercised. I certainly didn't feel like donating $8000 bucks to my former boss' checking account and then paying extra taxes on it all for the privilege of sitting on illiquid assets for an indeterminate number of years (with a high probability of the stock never being worth anything at all). Understanding the structure and fees and taxes of the options is very important specifically so you don't go and throw good money after bad in situations like this.