Options Trading Tutorial

what is the difference between employee stock options and regular exchange stock options?

Public Comments

1. .
2. Usually, employee stock options are designed so that employees of a company can purchase stock in that company at a reduced price. Often the company will pay for half and the employee pays for half.
3. Employees get a discount!!
4. Employee stock options are granted to employees by the company as part of their compensation. The options give you the right (but not the obligation) to purchase company stock at a predetermined price. If you have options with a $10 strike price, the options have vested, and the current market price of the stock is $20, then you can still buy it for $10 (plus commission) and make a profit. If the stock price is only $5 when you're vested, then they're worthless. You wouldn't pay $10 for a $5 stock. Exchange options work similarly except that you must buy them through a brokerage. The cost of the option fluctuates based on market conditions, just like a stock.