What Are Executable Stock Options?
Employee stock options are not just for the "C" level employee. Stock options are for employees at various levels of employment. An executable stock option has not expired and can still be exercised by the option owner.
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Incentive plans
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Employee stock options come in two forms: qualified (incentive) and non-qualified plans. According to FairMark.com, "Incentive stock options (ISOs) are a form of equity compensation that provides unique tax benefits --- and significant tax complexity."
Non-qualified Plans
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CNNMoney.com states, "Unlike ISOs, non-qualified stock options can be granted at a discount to the stock's market value. They also are transferable to children and charity, provided your employer permits it."
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Option Agreement
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When granted an option, an investor receives an option agreement from his employer. The agreement outlines the terms and conditions of the option plan, including earliest exercise date, how to exercise, option expiration date and if the option is executable in stages.
Exercise Period
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According to CNNMoney.com, "Most stock options have an exercise period of 10 years. This is the maximum amount of time during which the shares may be purchased, or the option exercised."
When to Exercise
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Exercising earlier than the stated period is usually not recommended; therefore, holding the option as long as possible and maximizing the investment is the conventional wisdom.
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