Options Trading Tutorial

How Employee Stock Options are benificial and harmful?

is it going to help only in long run , if i leave the company whether i'll be benefitted or not, can i return it back or sell it.

Public Comments

1. It is not really a very attractive thing. Typical ESOPs carry conditions for the tenure that you have stay in the company to exercise the option and the companies stock might go either direction in that tenure. So even if you do not leave the company getting benefitted from it depends on how the stock has moved. Stock award is definately the better thing.
2. In the early 1980s, Congress created a tax deduction to encourage people to sell a company’s stock to its employee stock option plan (ESOP). To get the benefit of that deduction, Jerry Carlton, the executor of an estate, sold stock to an ESOP at a loss. Engaging in what Justice Antonin Scalia later called "bait and switch" taxation, Congress repealed the tax deduction in 1986 and applied the repeal retroactively, costing the estate more than $600,000. Scalia’s comment notwithstanding, the Supreme Court unanimously upheld the government’s retroactive assessment of the tax. I think in the long run, stock options benefit employees being as the stock options you got worth what it is :-) There is no incentive on the employers to sell something to you and try to get them back later for taxation reasons.