Options Trading Tutorial

Should I exercise my 2000 private company stock options?

My exercise price is $4.25, the value today I believe is around $7.50. I understand I will have income to pay on the market value difference. The question I have really is, what happens if my company doesn't go public in 5, or 10 or 20 years? What happens if the company bankrupts, or gets bought out (ie the most likely scenerio on buyouts since I don't have the stock option plan documents as I got laid off by the company).

Public Comments

1. Do you still retain your stock options after leaving a company? That is very rare. Usually when you leave a company, you loose all unexercised options. If you can still exercise your options, and the stock is worth more the purchase price. By all means definitely do it. Turn them for a profit as soon as your option allows. If another company buys out your company, the stock is converted to the new companies stock at a dollar for dollar value. If your company goes broke, you loose your stock and the money you spent purchasing them.