Advise me on Underwater employee stock options
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Advise me on Underwater employee stock options
I joined a hypergrowth tech company an year ago and I was granted some 40K stock options with strike price of $15. The company went IPO at around $30 and stock rose to $70 but I was under 1 year cliff so couldn't sell the vested options and diversify.
Before the 1 year cliff expired the company stock fell 80%+ from all time high due to recent downturn and now the stock price is at $12, so practically my stock comp is -ve. My base is around $220K.The options expire in 10 year but if you are laid off or you leave then I have to exercise the options within 90 days which don't make sense given stock is underwater.
My net worth is around $1.6M excluding paid off house and its diversified in index funds. Mine and my wife combined income excluding stock comp is around $280K so practically I don't need the money immediately but It feels sad to have $2M stock money disappear just like that . I am in early forties so I have many years to retire.
What would you advise me? Just stay at the company and bide the time for stock options to go up or jump the ship and find another job.
PS: I do like the work and its very challenging to keep me happy.
Before the 1 year cliff expired the company stock fell 80%+ from all time high due to recent downturn and now the stock price is at $12, so practically my stock comp is -ve. My base is around $220K.The options expire in 10 year but if you are laid off or you leave then I have to exercise the options within 90 days which don't make sense given stock is underwater.
My net worth is around $1.6M excluding paid off house and its diversified in index funds. Mine and my wife combined income excluding stock comp is around $280K so practically I don't need the money immediately but It feels sad to have $2M stock money disappear just like that . I am in early forties so I have many years to retire.
What would you advise me? Just stay at the company and bide the time for stock options to go up or jump the ship and find another job.
PS: I do like the work and its very challenging to keep me happy.
Re: Advice me on Underwater employee stock options
Call options are worth money even if exercise price is above market price. This is especially true for long expiry options (10 years in this case) on highly volatile stocks.
If your company’s stock has options available for trading, you can look up how much the $15 call options expiring in 3 months are selling for. Theoretically you could sell those options every 3 months and pocket the premiums with little risk.
If your company’s stock has options available for trading, you can look up how much the $15 call options expiring in 3 months are selling for. Theoretically you could sell those options every 3 months and pocket the premiums with little risk.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: Advice me on Underwater employee stock options
You know your company and it's prospects better than I do but if you take NASDAQ index performance in 2000 as a guide it took >15 years for the index to recover inflation adjusted basis.
All of this depends greatly on the job market. If you can get a job with 300k TC I'd leave for that, but I don't think I'd bail for a different job paying 220k TC.
All of this depends greatly on the job market. If you can get a job with 300k TC I'd leave for that, but I don't think I'd bail for a different job paying 220k TC.
Re: Advice me on Underwater employee stock options
They expire in 10 years, so as long as you like working there do nothing. If they go up again, then do something. If not, enjoy the work and the salary. Even possible they reprice the options, but that is less done these days. Meanwhile, they will probably hand out more options at the current market price.avidlearner wrote: ↑Thu May 26, 2022 11:15 pm I joined a hypergrowth tech company an year ago and I was granted some 40K stock options with strike price of $15. The company went IPO at around $30 and stock rose to $70 but I was under 1 year cliff so couldn't sell the vested options and diversify.
Before the 1 year cliff expired the company stock fell 80%+ from all time high due to recent downturn and now the stock price is at $12, so practically my stock comp is -ve. My base is around $220K.The options expire in 10 year but if you are laid off or you leave then I have to exercise the options within 90 days which don't make sense given stock is underwater.
My net worth is around $1.6M excluding paid off house and its diversified in index funds. Mine and my wife combined income excluding stock comp is around $280K so practically I don't need the money immediately but It feels sad to have $2M stock money disappear just like that . I am in early forties so I have many years to retire.
What would you advise me? Just stay at the company and bide the time for stock options to go up or jump the ship and find another job.
PS: I do like the work and its very challenging to keep me happy.
Re: Advice me on Underwater employee stock options
Stay if you like the work and people around you. Good companies take care of their employees long term, they can't control short term stock performance unfortunately!
Also 40k options probably vest over 4 years, right? Will you be getting new RSUs(not options now that company is public) every year, aka Refreshers - that should make up some of the loss in value.
Also 40k options probably vest over 4 years, right? Will you be getting new RSUs(not options now that company is public) every year, aka Refreshers - that should make up some of the loss in value.
Re: Advice me on Underwater employee stock options
You started a year ago and it's trading roughly where your strike price is... and it's now public so the vested options are liquid (albeit underwater currently). The majority of folks don't ever get a liquidity event, plus it often takes 6-10 years for a liquidity event to happen if they are lucky. All things considered that's actually a great position to be in, and you're much more likely to see some value in your options.
Also, you probably missed out on ~$1.3m, not $2m, if you sold at $70 (and assuming you were fully vested). If you did a same-day exercise to minimize the risk of a price collapse (which you have witnessed) you would incur short-term cap gains and other state/federal tax impacts which probably means you're paying 40%+ in taxes on your sale.
An interesting thought-exercise... assume you have a 50% chance to sell the 40k options at $30 (a $15 profit) in 4 years time: you would get $600k pre-tax (say $400k post-tax). There might also be a 50% chance the company never rebounds and you see $0 from your options. Risk-adjusted, that means you would get $300k pre-tax in 4 years = $75k/yr from your options. If someone offered you a job for an extra $75k/yr, risk-adjusted it might be worth switching jobs (or maybe even $50k extra).
You're only 25% vested, you enjoy the work, you're paid fairly, have good chunk of savings already so can take the risk with your options, and the company is public with likely RSU top-ups going forwards. You have 3 yrs to vest the other 75% of your options and sell some if the stock recovers along the way. And psychologically it's a great learning event to go through.
How are the long-timers coping at your work that didn't get to sell? Must be some grumpy folks there
Also, you probably missed out on ~$1.3m, not $2m, if you sold at $70 (and assuming you were fully vested). If you did a same-day exercise to minimize the risk of a price collapse (which you have witnessed) you would incur short-term cap gains and other state/federal tax impacts which probably means you're paying 40%+ in taxes on your sale.
An interesting thought-exercise... assume you have a 50% chance to sell the 40k options at $30 (a $15 profit) in 4 years time: you would get $600k pre-tax (say $400k post-tax). There might also be a 50% chance the company never rebounds and you see $0 from your options. Risk-adjusted, that means you would get $300k pre-tax in 4 years = $75k/yr from your options. If someone offered you a job for an extra $75k/yr, risk-adjusted it might be worth switching jobs (or maybe even $50k extra).
You're only 25% vested, you enjoy the work, you're paid fairly, have good chunk of savings already so can take the risk with your options, and the company is public with likely RSU top-ups going forwards. You have 3 yrs to vest the other 75% of your options and sell some if the stock recovers along the way. And psychologically it's a great learning event to go through.
How are the long-timers coping at your work that didn't get to sell? Must be some grumpy folks there
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Re: Advice me on Underwater employee stock options
not sure this is much consolation: it sounds like it was (and still is) entirely out of your control. One way of thinking about it could be that the $2M money never existed - it potentially existed in a reality that never happened. So there's no loss. Simple to argue intellectually, maybe harder to get the gut and emotions to agree.avidlearner wrote: ↑Thu May 26, 2022 11:15 pm Before the 1 year cliff expired the company stock fell 80%+ from all time high due to recent downturn and now the stock price is at $12 [...] It feels sad to have $2M stock money disappear just like that
Yes!
I am not not experienced with options, but here is my attempt to estimate a theoretical valuation:
- strike price is $15
- underlying price is $12
- expiry is in 10 years.
- assumed interest rate is 2.75 % , i've matched that with what bloomberg says the yield on a 10 year treasury is
- dividend yield: 0% . young growth companies probably don't pay dividends
- volatility: 80% -- this is a very rough backwards looking historical volatility estimate by computing standard deviation of the three reported share prices ($30, $70, $12) and dividing by the mean.
There's a decent chance I misunderstood how to plug in the numbers above -- options-literate bogleheads, please call out and correct any flaws!
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Re: Advice me on Underwater employee stock options
Companies can convert underwater stock options to ones that are better priced as a means of enticing employees to stick around. If your stock price remains low, it's possible that your company can do this. My HOT company did this a couple times after the .com bust and we were no longer HOT. It didn't fully make up for the perceived loss of the original shares, but it did help.
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Re: Advice me on Underwater employee stock options
From your description, you have options under water but have not had to buy any. Is that correct? If that's the case, perhaps take a lesson that when accepting an offer for any new job, assume that the options are worthless and that any promised bonuses will be zero'd. Both of these have happened to me and when negotiating the job offer, have had very surprised people on the company side that I'm pushing for more base salary and don't care whatsoever about options and bonus percentage. It's served me quite well. Out of all my jobs, only 3 (our of a dozen) have paid me significant bonus, option and RSU money. Several have zero'd bonus when business is low and I've left several companies where my options are under water. One job, I believe there was some illegal option pricing by those at the top of the company and it was the only time I made bank selling first year vesting options. After I sold, the stock tanked and co-workers who held on, thinking it would go even higher were left with nothing for another 10 years, at which point, they left for better jobs.
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Re: Advice me on Underwater employee stock options
I am in the camp that options are worthless until they aren't.
If you like the work and $200k is fair worth for your skills, then forget about the options and keep your job. Don't exercise underwater options.
I would be more concerned about the volatility in the prospects for the company. Are there substantive reasons for the disappointment regarding the future prospects?
If you like the work and $200k is fair worth for your skills, then forget about the options and keep your job. Don't exercise underwater options.
I would be more concerned about the volatility in the prospects for the company. Are there substantive reasons for the disappointment regarding the future prospects?
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Re: Advice me on Underwater employee stock options
Big picture... you have $1.6M portfolio and paid for house. You are crushing it even with the options at $0.
Don't worry about what coulda or shoulda been.... you are head of 98.765% of people your age and income (yes I made that # up).
Most people look great but are really broke.
I wouldn't worry about what they are worth - continue being the best you can be at work and maybe one day they will be worth a lot more (or maybe you will get issued more options for performance). If you look up one day and the options are worth X or Y amount then sell them and invest the proceeds into your diversified portfolio (exit strategy).
Don't worry about what coulda or shoulda been.... you are head of 98.765% of people your age and income (yes I made that # up).
Most people look great but are really broke.
I wouldn't worry about what they are worth - continue being the best you can be at work and maybe one day they will be worth a lot more (or maybe you will get issued more options for performance). If you look up one day and the options are worth X or Y amount then sell them and invest the proceeds into your diversified portfolio (exit strategy).
Stay the course!
Re: Advice me on Underwater employee stock options
My advice is simple - let the past go. That it was in the money in the past had no practical bearing on the future. Worse, there are a host of behavioral and cognitive errors. If you want I could point you to some lay books on behavioral economics on this point.avidlearner wrote: ↑Thu May 26, 2022 11:15 pmI don't need the money immediately but It feels sad to have $2M stock money disappear just like that . I am in early forties so I have many years to retire.
I understand the emotional pain but it is not helpful in making decisions.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Advice me on Underwater employee stock options
Your basically correct but volatile is not 80%. That is a nuts number. The VIX index is at 26 today. Your company’s go forward is probably higher than that but not 80. You can look up the implied volatility embedded in the price of your company’s traded options.pseudoiterative wrote: ↑Fri May 27, 2022 3:05 am [*] volatility: 80% -- this is a very rough backwards looking historical volatility estimate by computing standard deviation of the three reported share prices ($30, $70, $12) and dividing by the mean.
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Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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Re: Advice me on Underwater employee stock options
Thank you for the kind words and I do agree the company culture is the best I have worked at. And yes the options vest over 4 years.todaysBob wrote: ↑Fri May 27, 2022 1:39 am Stay if you like the work and people around you. Good companies take care of their employees long term, they can't control short term stock performance unfortunately!
Also 40k options probably vest over 4 years, right? Will you be getting new RSUs(not options now that company is public) every year, aka Refreshers - that should make up some of the loss in value.
Yes I got around $200K of refreshers vesting over 4 years as part of this year appraisal but they were priced at $50 so even they are significantly down. I just vested my first quarter lot and diversified.
Last edited by avidlearner on Fri May 27, 2022 12:33 pm, edited 1 time in total.
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Re: Advice me on Underwater employee stock options
Thanks alex_686, please point me to the books on behavioral economics on this pointalex_686 wrote: ↑Fri May 27, 2022 8:38 amMy advice is simple - let the past go. That it was in the money in the past had no practical bearing on the future. Worse, there are a host of behavioral and cognitive errors. If you want I could point you to some lay books on behavioral economics on this point.avidlearner wrote: ↑Thu May 26, 2022 11:15 pmI don't need the money immediately but It feels sad to have $2M stock money disappear just like that . I am in early forties so I have many years to retire.
I understand the emotional pain but it is not helpful in making decisions.
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Re: Advice me on Underwater employee stock options
See the wiki page on recommended books. There is a Behavioral Finance section.avidlearner wrote: ↑Fri May 27, 2022 10:14 am please point me to the books on behavioral economics on this point
Link: https://www.bogleheads.org/wiki/Book_re ... al_finance
See also, behavioral pitfalls. https://www.bogleheads.org/wiki/Behavioral_pitfalls
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Re: Advice me on Underwater employee stock options
I particularly like Thinking Fast, Thinking Slow. Author won a Nobel for his work in the field.retired@50 wrote: ↑Fri May 27, 2022 10:25 amSee the wiki page on recommended books. There is a Behavioral Finance section.avidlearner wrote: ↑Fri May 27, 2022 10:14 am please point me to the books on behavioral economics on this point
Link: https://www.bogleheads.org/wiki/Book_re ... al_finance
See also, behavioral pitfalls. https://www.bogleheads.org/wiki/Behavioral_pitfalls
Regards,
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Advice me on Underwater employee stock options
You never had 2m if you weren't even vested, so you haven't lost anything. I've seen cases of $1m of vested options disappear in a week during a quiet period after earnings. That was really bad.avidlearner wrote: ↑Fri May 27, 2022 10:14 amThanks alex_686, please point me to the books on behavioral economics on this pointalex_686 wrote: ↑Fri May 27, 2022 8:38 amMy advice is simple - let the past go. That it was in the money in the past had no practical bearing on the future. Worse, there are a host of behavioral and cognitive errors. If you want I could point you to some lay books on behavioral economics on this point.avidlearner wrote: ↑Thu May 26, 2022 11:15 pmI don't need the money immediately but It feels sad to have $2M stock money disappear just like that . I am in early forties so I have many years to retire.
I understand the emotional pain but it is not helpful in making decisions.
If you like the company and feel it has good prospects, just keep working.
Re: Advice me on Underwater employee stock options
One last thought. Bogleheads often say that the stock market is a random walk. Mathematical this implies that prior movements have no impact on future movements. This is basically true of the stock market. We can go deep in the weeds for nuances but the impact for your question is going to be very minor.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Advice me on Underwater employee stock options
It depends on what the next few years look like. I was at a company in the late dotcom boom, we went public after the bust had started, and I saw millions in paper evaporate. The company never really recovered. When I left, I looked at the market to see what kinds of jobs were out there, and I counted over 20 private companies which were pretty direct competitors. For better or worse, investors like a hot story without much history more than a competent story with history.avidlearner wrote: ↑Thu May 26, 2022 11:15 pm What would you advise me? Just stay at the company and bide the time for stock options to go up or jump the ship and find another job.
The problem, though, is that tech has been seeing layoffs and hiring freezes. If you're amazing, this can work in your favor, because companies will be concentrating a lot of focus on selecting high-potential individuals. But in looking for something more lucrative, you run the risk of not being able to find something comparable to what you've got.
Personally, if you've only been there a year, and you like the job, I'd stick with it for now. The stock drop (and likely weakness for the next while) is going to crater morale - but you're not a special case, lots of tech companies have had really significant stock drops. If you end up with layoffs, that's also likely to do a real number on you, but, again, it may be that there's nowhere to run and hide. Based on past history, it will be a couple years of discomfort, and then we'll start to see new growth from the ashes, and you can decamp to greener pastures.
And maybe your stock will recover! I mean, evidence is that it won't, but you can hope!
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Re: Advice me on Underwater employee stock options
The story like yours isn't uncommon. Something similar happened to me years back.
A couple of options:
- Just accept the situation. The options aren't badly underwater, they still have significant time value if you intend to stay long term and think company prospects are good.
- Go somewhere else. RSUs are more stable than options, but may have less upside.
- Negotiate. Tell your manager that you feel like that after the downturn your comp no longer meets your comp expectations, and ask for a refresher. (This approach is a bit dicey, and a lot depends on company culture and your relationship with your manager. It might also backfire).
A couple of options:
- Just accept the situation. The options aren't badly underwater, they still have significant time value if you intend to stay long term and think company prospects are good.
- Go somewhere else. RSUs are more stable than options, but may have less upside.
- Negotiate. Tell your manager that you feel like that after the downturn your comp no longer meets your comp expectations, and ask for a refresher. (This approach is a bit dicey, and a lot depends on company culture and your relationship with your manager. It might also backfire).
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: Advice me on Underwater employee stock options
There's a lot of discussion of this in the thread, but it's ignoring the poster's actual situation. He doesn't have listed options, he has incentive stock options (ISOs) or non-qualified stock options (NSOs) issued as part of an employer equity comp plan. These are not transferrable, but can only be exercised by the employee according to the terms of the agreement.gougou wrote: ↑Thu May 26, 2022 11:31 pm Call options are worth money even if exercise price is above market price. This is especially true for long expiry options (10 years in this case) on highly volatile stocks.
If your company’s stock has options available for trading, you can look up how much the $15 call options expiring in 3 months are selling for. Theoretically you could sell those options every 3 months and pocket the premiums with little risk.
He's also certainly prohibited or at least restricted from trading derivatives in his company stock. Both because he's an employee and also because I can tell from the price history what company this is and they are a broker dealer.
That said, the options are not *worthless*, but they put you in a situation where you need to see significant growth before they become worth anything. Essentially you have long dated out of the money options. You should not exercise them while they're underwater, but if you think the company can recover that's fine.
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Re: Advice me on Underwater employee stock options
You nailed it, these are NSO and I cant trade derivatives. I agree they aren't 'worthless' but my comp has went down by 50% while others with RSUs its down by only 25%. But on the flip side if stock doubles then Options have more upside than RSUs.kevinpet wrote: ↑Sat May 28, 2022 1:10 pmHe's also certainly prohibited or at least restricted from trading derivatives in his company stock. Both because he's an employee and also because I can tell from the price history what company this is and they are a broker dealer.gougou wrote: ↑Thu May 26, 2022 11:31 pm Call options are worth money even if exercise price is above market price. This is especially true for long expiry options (10 years in this case) on highly volatile stocks.
If your company’s stock has options available for trading, you can look up how much the $15 call options expiring in 3 months are selling for. Theoretically you could sell those options every 3 months and pocket the premiums with little risk.
Thank you all for the advice as I like the work, I will stick for a while.
Re: Advice me on Underwater employee stock options
Alright, I think I also know what company it is. I looked at the available option with the longest expiry (Jan 2024 $15 call) and that’s worth $2.7 right now. So your 40k options are worth at least $108K.avidlearner wrote: ↑Sat May 28, 2022 2:15 pmYou nailed it, these are NSO and I cant trade derivatives. I agree they aren't 'worthless' but my comp has went down by 50% while others with RSUs its down by only 25%. But on the flip side if stock doubles then Options have more upside than RSUs.kevinpet wrote: ↑Sat May 28, 2022 1:10 pmHe's also certainly prohibited or at least restricted from trading derivatives in his company stock. Both because he's an employee and also because I can tell from the price history what company this is and they are a broker dealer.gougou wrote: ↑Thu May 26, 2022 11:31 pm Call options are worth money even if exercise price is above market price. This is especially true for long expiry options (10 years in this case) on highly volatile stocks.
If your company’s stock has options available for trading, you can look up how much the $15 call options expiring in 3 months are selling for. Theoretically you could sell those options every 3 months and pocket the premiums with little risk.
Thank you all for the advice as I like the work, I will stick for a while.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
Re: Advice me on Underwater employee stock options
I would ignore these options in making any further stay/go career decisions.
Re: Advice me on Underwater employee stock options
Great analysis! We might want to look at listed options for volatility and skew, and also to imply borrow rate (likely the stock has negative implied repo). But for the purposes here, those are maybe not important.pseudoiterative wrote: ↑Fri May 27, 2022 3:05 amnot sure this is much consolation: it sounds like it was (and still is) entirely out of your control. One way of thinking about it could be that the $2M money never existed - it potentially existed in a reality that never happened. So there's no loss. Simple to argue intellectually, maybe harder to get the gut and emotions to agree.avidlearner wrote: ↑Thu May 26, 2022 11:15 pm Before the 1 year cliff expired the company stock fell 80%+ from all time high due to recent downturn and now the stock price is at $12 [...] It feels sad to have $2M stock money disappear just like that
Yes!
I am not not experienced with options, but here is my attempt to estimate a theoretical valuation:
If you plug all that into options price calculator it spits out a theoretical price of $9.59 per call option -- that's the value driven by the long expiry and high volatility -- very good chance that the option would be in the money at some point in the next decade, even if it happens to be "underwater" now. So if you are holding 40k call options, that still sounds like money to me. Assuming you're out of lockout period! Otherwise its all still theoretical, maybe the company goes bust and its worth a big zero by the time you have the ability to take action .
- strike price is $15
- underlying price is $12
- expiry is in 10 years.
- assumed interest rate is 2.75 % , i've matched that with what bloomberg says the yield on a 10 year treasury is
- dividend yield: 0% . young growth companies probably don't pay dividends
- volatility: 80% -- this is a very rough backwards looking historical volatility estimate by computing standard deviation of the three reported share prices ($30, $70, $12) and dividing by the mean.
There's a decent chance I misunderstood how to plug in the numbers above -- options-literate bogleheads, please call out and correct any flaws!
One thing to consider is that OP's expected life at the company is probably much less than 10 years. So, absent another kind of model, we'd want to cut the option expiry to something shorter.
Re: Advice me on Underwater employee stock options
They can't be sold, and they can't be hedged, so I don't think they are easily comparable to options that are actually marketable. I would not count them as being worth much.
This. At this point you could probably find another job paying you much more if you care about the money. If you like the job, though, and sounds like you don't really need the money, that's a nice place to be in.
Last edited by jjj_22 on Sat May 28, 2022 8:48 pm, edited 1 time in total.
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Re: Advice me on Underwater employee stock options
Welcome to 2000, trust me the some of the “long timers” took plenty of profit. Many people in the early 2000’s took significantly under compensated jobs with the future options for the big win - big looser for many.avidlearner wrote: ↑Fri May 27, 2022 10:02 amThe long timers didn't had a lockup so they were able to sell but most didn't sell as company is hypergrowth so they thought it would reach to $150 .
Re: Advice me on Underwater employee stock options
They still have a fair market value even though they can’t be sold. The market tells you these options are worth at least $108K. If you think that option is overvalued, you could short it and make money.jjj_22 wrote: ↑Sat May 28, 2022 6:14 pmThey can't be sold, and they can't be hedged, so I don't think they are easily comparable to options that are actually marketable. I would not count them as being worth much.
This. At this point you could probably find another job paying you much more if you care about the money. If you like the job, though, and sounds like you don't really need the money, that's a nice place to be in.
OP is giving up at least $108k market value if he quits, although $108k isn’t much these days in tech industry and OP could easily get a sign-up bonus more than that.
It is wrong to ignore these options completely. What if OP has 4M options? Would you still ignore it? That would be a big fortune if things go right.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
Re: Advice me on Underwater employee stock options
It is at least bad optics if not outright forbidden to short your own employer’s stock. Do not do this.gougou wrote: ↑Sat May 28, 2022 11:34 pmThey still have a fair market value even though they can’t be sold. The market tells you these options are worth at least $108K. If you think that option is overvalued, you could short it and make money.jjj_22 wrote: ↑Sat May 28, 2022 6:14 pmThey can't be sold, and they can't be hedged, so I don't think they are easily comparable to options that are actually marketable. I would not count them as being worth much.
This. At this point you could probably find another job paying you much more if you care about the money. If you like the job, though, and sounds like you don't really need the money, that's a nice place to be in.
OP is giving up at least $108k market value if he quits, although $108k isn’t much these days in tech industry and OP could easily get a sign-up bonus more than that.
It is wrong to ignore these options completely. What if OP has 4M options? Would you still ignore it? That would be a big fortune if things go right.
It may HAVE BEEN worth millions, but things changed.
A stock that dropped 80% usually has a good reason.
And having options is very different than having the stock.
If the stock crawls back half way over the next few years, they may still be out of the money. Is that really worth years of your life for such a long shot ? My point in ignoring the options was, if you enjoy the job,
think the company will do well going forward, stay. They may compensate you other ways. If you feel pessimistic about your company and/or your personal role there, I wouldn’t stay for these options hoping they get back to some irrelevant past level. Could be years, could be never before that happens, and other opportunities may pass you by.
I heavy discount the value of non cash compensation in making career decisions. Look what happened to Netflix, Facebook/Meta and countless others lately. Look at history, most early dot coms and most early automobile manufacturers are GONE. You have to be really really lucky for these things to work out. Have to be in early enough to have upside, before it’s a known success, or come in late and get a small piece of an already successful pie. Cash is king baby. Then invest the cash the boglehead way.
Re: Advise me on Underwater employee stock options
I’m in a similar position, and I’m actively looking but only going to jump ship for a better opportunity. Frankly retention and recruiting for companies with big drops is extremely challenging.