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If you bought options your base case should be that they expire worthless, except some very special cases. If you sold options your likely case should be extrem

If you bought options your base case should be that they expire worthless, except some very special cases. If you sold options your likely case should be extreme loss, exceeding the premium in double digit multiples. If you don't know this then you shouldn't have traded, and were misinformed. They're considered complex instruments for a reason, and the ease with which the masses trade them is something of a tragedy. This has happened multiple times in the past and will happen many times again, as there's nothing new under the sun (from Livermore, one of the greatest speculators). A fun little book that I like to recommend: "Confusion of confusions". It was written by a Jewish trader working with the 1600s Amsterdam stock and bond exchanges. It is a good proof of how little things have changed, you'll understand pretty much everything once you map the terms and concepts to their modern equivalents.

sokoloff 4y ago
In context, I’d assume OP’s options were employer-granted options being far more likely than they were speculating on public market options.
- tharkun__ 4y ago
  In which case - and sorry for not having any consoling words here for the OP here - I can unfortunately not really have much empathy here. An overwhelming majority of people especially here on HN laugh at you if you discount variable aspects of renumeration. Employer issued options or RSUs are down 90%? So what! You accepted a variable renumeration scheme. You knew ahead of time. You are no longer making 200k base + 200k in options/RSUs that you expected to actually yield you 500k in value for doing nothing? Well that's the deal you took. EDIT: From the down voters I would appreciate some substantiated reply as to why this isn't true. Don't get me wrong, if I had taken such a deal and was now under I'd be miserable as well, especially if I counted on that money and maybe bought something on credit expecting a windfall later. Such as getting a huge mortgage I thought I'd be able to pay off very fast soon. I took the opposite deal. I rejected offers that wanted to give me a lot of variable renumeration and a small base salary and was laughed out of the room.
  - tjr225 4y ago
    This was the general sentiment here 8 years ago and I’ve always trusted it. As such my various equities have always been treated as “funny money.” If it works out, great- but I don’t count on them. If that sentiment has somehow reversed… well, you picked a bad time to do so!
  - svnt 4y ago
    I’d hazard a guess that you’re being downvoted because of your lack of empathy, which is the point of the post, but also because of your gotcha position around variable comp. If you work for a startup and reject variable comp, you are wasting your time. Go get a safer, easier, better-salaried position. If you aren’t working for a startup, you’re in no position to comment on the validity of the approach people take there working with variable comp. You just walked into a funeral for people who got hit by a train and said “what’s the big deal? I never cross train tracks, they’re too risky.”
    - tjr225 4y ago
      Except it’s not a funeral at all, they likely still make well over median income.
    - tharkun__ 4y ago
      We don't know about the OP. He didn't say what his situation was. For the hypothetical situation of my parent my stance stays even if voted into oblivion. And I knew it would likely happen given the overall sentiment on HN. Like with variable renumeration itself knew what I was getting into. FWIW I have a variable mortgage and I knew what might happen and is now happening and that is why I didn't buy at the top of what the bank would give me. If you work for a startup, like you say, there's usually no option to get more base comp. Absolutely understood. You do that when you are young and take a chance to hit it big. Don't complain if you don't hit it big though. I never said I applied at a startup though and the example I made is more indicative of Amazon or Google. The way I see the parents example the appropriate analogy would be a funeral for people that liked standing on the train tracks knowing a train was coming and trying to jump before it hit them and I wonder why everyone is surprised that it happened.

sokoloff 4y ago

In context, I’d assume OP’s options were employer-granted options being far more likely than they were speculating on public market options.

tharkun__ 4y ago
In which case - and sorry for not having any consoling words here for the OP here - I can unfortunately not really have much empathy here. An overwhelming majority of people especially here on HN laugh at you if you discount variable aspects of renumeration. Employer issued options or RSUs are down 90%? So what! You accepted a variable renumeration scheme. You knew ahead of time. You are no longer making 200k base + 200k in options/RSUs that you expected to actually yield you 500k in value for doing nothing? Well that's the deal you took. EDIT: From the down voters I would appreciate some substantiated reply as to why this isn't true. Don't get me wrong, if I had taken such a deal and was now under I'd be miserable as well, especially if I counted on that money and maybe bought something on credit expecting a windfall later. Such as getting a huge mortgage I thought I'd be able to pay off very fast soon. I took the opposite deal. I rejected offers that wanted to give me a lot of variable renumeration and a small base salary and was laughed out of the room.
- tjr225 4y ago
  This was the general sentiment here 8 years ago and I’ve always trusted it. As such my various equities have always been treated as “funny money.” If it works out, great- but I don’t count on them. If that sentiment has somehow reversed… well, you picked a bad time to do so!
- svnt 4y ago
  I’d hazard a guess that you’re being downvoted because of your lack of empathy, which is the point of the post, but also because of your gotcha position around variable comp. If you work for a startup and reject variable comp, you are wasting your time. Go get a safer, easier, better-salaried position. If you aren’t working for a startup, you’re in no position to comment on the validity of the approach people take there working with variable comp. You just walked into a funeral for people who got hit by a train and said “what’s the big deal? I never cross train tracks, they’re too risky.”
  - tjr225 4y ago
    Except it’s not a funeral at all, they likely still make well over median income.
  - tharkun__ 4y ago
    We don't know about the OP. He didn't say what his situation was. For the hypothetical situation of my parent my stance stays even if voted into oblivion. And I knew it would likely happen given the overall sentiment on HN. Like with variable renumeration itself knew what I was getting into. FWIW I have a variable mortgage and I knew what might happen and is now happening and that is why I didn't buy at the top of what the bank would give me. If you work for a startup, like you say, there's usually no option to get more base comp. Absolutely understood. You do that when you are young and take a chance to hit it big. Don't complain if you don't hit it big though. I never said I applied at a startup though and the example I made is more indicative of Amazon or Google. The way I see the parents example the appropriate analogy would be a funeral for people that liked standing on the train tracks knowing a train was coming and trying to jump before it hit them and I wonder why everyone is surprised that it happened.