Company Stock Experts.............

[mom2grace]

DH works for a company that grants stock options. You have to let them vest, and then you have a certain time frame to exercise them. For some of them, we need to exercise them within the next 2 years. They were granted at $100 and now the stock is at $70 and is unlikely to rise to $100 over the next few years. So, when we "exercise" them what happens since they are worth less than the price when they were granted?

Are they worth anything? Or can we "cash them in" for fewer real shares?

TIA!

 

[Bob Slydell]

They're worthless right now. You could exercise them, but it would make no sense since you could buy the same shares of stock for $30 less on the open market (assuming the market stays the same).

 

[KarenC]

They're out-of-the-money and aren't worth exercising until the stock trades above $100.

 

[NewJersey]

It's like I'm reading a question from the CPA study book. As the two above me said, they are worthless right now!

 

[MorganLeFey]

that's what I like about my company's stock plan. instead of "options" you get the opportunity to buy the stock outright at a discounted price.

 

[Eeyore'sthebest]

Have your DH check the plan again. We have something similar. The options have to vest, then the stock has to vest, then we can sell. However if I'm not mistaken, I can hold the options for the next 30 years and exercise them when I'm ready. Its not like its a "times up" deal.
Just double check to be on the safe side. Otherwise I would just sit on them for the next two years. I'll keep my fingers crossed with you that the market goes up.

 

[Galahad]

Thry may always be worthless to you. If you are at the very end of the period and the options are about to expire and the stock price is still under $100, depending on your financial situation you may not want to gamble that the price will go up enough just so you can break even. You also have to pay taxes on it when you exercise them (unless you immediately sell the stock at a loss, which wouldn't be rational). I worked for a company that eventually when bankrupt and out of business. I had thousands of shares of stock options that would have been foolish to ever exercise along the way.