4 ms·
The only risk is that one exercises the options, but by the time one sells the shares (which they got as the result of exercising options), the price of the sto
by ptero 5y ago
The only risk is that one exercises the options, but by the time one sells the shares (which they got as the result of exercising options), the price of the stock falls below the strike price. To avoid this risk, do a quick sell after exercise. This makes risk minimal; in case of bigger companies effectively zero.
Bigger risk comes in if someone wants to do an exercise and hold to sell much later, which can bring tax advantages. But this is a different game entirely. In the case of employee with little spare cash (to the tune of borrowing money for the exercise), not doing exercise and sell is really leaving money on the table. My 2c.
- ghaff 5y agoOne thing I learned during the dot-bomb era is think hard about holding too much of your company's stock and, especially, think really hard about exercising options and then not selling. Fortunately the stock drifted back up a ways over time and then my former company was acquired for a nice spike. So between that and tax loss offsets, I didn't do that bad. But I've been careful since. (Of course, more recently, I'd have been better off holding more for longer but I can't really complain.)
- vmception 5y agoYou missed the point that many people with good finances are denied credit. They cant get a $75,000 loan. Thats the only point I was making. The person provided no insight whatsoever and was unable to see that their experience is different.