How Stock Options Work:
Some useful reference material

Here are a few FAQs and more in-depth documents about how stock options work and what employees of high-tech companies should know about them. (It's not our fault if you do something stupid with this information. See our disclaimer.)

This may all seem like pointy-haired boss material, but it affects you directly. Where do stock options come from? What do you do when they vest? Where does venture capital come from? How do new infusions of capital affect the value of your stock options? How do typical stock option agreements work, and what should you watch out for? What happens to your stock options if your company gets bought, or if it goes IPO? How do you evaluate stock options as part of a job offer?

A few points to keep in mind when you read these documents:

• Capital gains tax is usually less than income tax.
• Long term capital gains tax is usually less than short term capital gains tax.

Easy: Important Stock Option Terminology and Concepts

Pretty basic: Different types of companies

Moderate: Stock Option Strategies

In-depth: Equity Compensation in Emerging Growth Companies (external link)

Disclaimer: This material is provided free as a service to the geek community. We don't guarantee that it's current, useful, or even vaguely accurate. For all you know, it could be pure garbage that we generated with a copy of the US tax law and a Markov chaining program. We take no responsibility whatsoever for anything bad that happens to you, ever. Have a nice day.