Quote:
Originally Posted by sperry
I think people are forgetting what stock options are.
"Mr. Perry, IGT would like to offer you the option to buy our stock 5 years from now at today's price of $38/share"
"Gee thanks IGT, I hope 5 years from now when those options are vested, the stock is worth more than $38/share... 'cause today they're worth $28/share." 
It's not like IGT is going to offer me the option to buy Microsoft stock, or like I can do anything with my IGT options before they're vested. |
I understand how options work and was not claiming to know what your financial position is. I used to work with people who had the majority if not all of their 401K in the company stock. That is what I am saying was not a good practice. there are also people who either hold their options beyond when they vest/mature or exercise options and then hold the stock. Those are equally bad.
An option that has not yet vested is not an investment, it is a promise or a hope and should be treated as such, just like bonuses and to some extent dividends.
And if you think your company's stock is going down, nothing prevents you from shorting the stock against those options using the options as a hedge. If you are right, you make money on the short, if not, you exercise the options which cost you nothing and close the short position flat. Talk about a low risk option. A free covered short or long position is an investor's dream and it is legal.