Stock options through your employers

[finances5]

Hi,

What's the difference between obtaining stock options through your employers or purchasing them on your own? Thanks.

 

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[J_B0nes]

Employee stock options give an employee the right to buy stock in their firm for a specified price and over a specified period. They are non-transferable thus have no market value on their own.

The idea is that you lock in a price and hope that the stock trades higher over the specified period. You would exercise your stock options (purchase) when the open market price is higher, earning an instant unrealized gain since you bought at a discount.

When you buy on your own, you simply pay the market price.

This is my first post, so as background I work in the finance / corporate world.