4 ms·

pardon my ignorance, but what exactly does exercising stock options mean?

• kube-system 6y ago
  A stock option is an agreement for the right to buy a stock at a particular price. When you exercise the option, you take them up on that agreement and actually exchange the dollars for the stock.
• deleted 6y ago
  [deleted]
• sunir 6y ago
  Options aren’t stocks. They are an option to buy the stocks. Exercising your options means buying the stocks. They options contract has a price for stocks set up front. Ideally the price of the stock has risen over time so when you exercise the option to buy the stocks, you are buying the stocks at a lower price than their current market value. Thus you make money.
• atomicnumber3 6y ago
  A stock option is a contract that entitles the holder of the option to either buy or sell stock at a price specified at the time of the contracts creation (this is the “strike price”). The price can be anything. The value of the option is, very roughly speaking, the difference between the current price (“spot price”) and the strike price. The action of using your contract to actually do the buying or selling of shares is called “exercising” the option, and it “uses up” the contract. Each contract is for 100 shares (a “round lot”). When exercising your option and then buying or selling the shares immediately at the strike price would make you money, the option is said to be “in the money”. If not, the option is “out of the money”. The parent comment is noting that their options are out of the money, so they’re worthless. No point in exercising. Options are highly complicated financial instrument though, so this is a very rough explanation. This is not financial advice.