Stock options are frequently given to employees as part of an overall compensation plan. Basically, stock options give employees the right to purchase stock in the company at a certain price which is usually much less than what the stocks are selling for on the open market. If stock options are part of your compensation package, you might be wondering how to buy or sell them. The tips below will give you a short primer on how to buy & sell stock options.
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Difficulty:
Moderately Easy
Instructions
1
If your company gives you stock options as part of your compensation package, you can decide to purchase the stock if you want to. They will usually offer employees stock option at a discounted price, so buying them is often a good idea.
2
To buy your stock options, you simply have to exercise your right to the stock by buying it. Almost all stock options have an expiration date, so if you want to buy, you'll have to do so before the option expires. To buy the stock option, you'll simply need to contact your broker and ask him to exercise your right to buy.
3
Once you have bought the stock option, it's yours and you are entitled to all gains and losses on the stock. If you want to sell the stock, you have the right to do that as well. However, many stock options require you to keep the stock for a certain amount of time. This time is called a waiting period and you should be able to find what waiting period, if any, your stock options have by looking in the contract that was provided to you by your employer.
4
After you have waited the required time, you are free to sell your stock at any time. You again need to contact your broker and let him know that you'd like to sell your stock options. If the stocks are worth more than you have paid for them, then you will have made money. If they are worse less when you decide to sell, you will have lost money.
Tips & Warnings
Once you have purchased your stock options, and waited the required time before you are allowed to sell them, you can sell them at any time and in any manner you would like. You can choose to sell some and keep some or sell them all.
Talk to a qualified financial counselor before deciding to buy or sell your stock options as they can assist you with deciding whether or not it is a good idea for your personal situation.
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cadence
Jan 10, 2009
Great info. I do not understand stocks.