(Closed) stock options?? question for bees with a background in finance!

posted 6 years ago in Money
Post # 3
18643 posts
Honey Beekeeper
  • Wedding: June 2009

Stock options are basically the option to purchase a stock at a certain price for a certain amount of time.  This is a good deal if you get a good option price (ex. $25) and the price of the stock is at something high when you exercise the option (ex $100).  Then you get a profit of $75 on every option you exercise and sell.  I would be wary of putting too much of your money in your company’s stock.  You are already depending on them to provide a paycheck, you don’t want to lose all your money too if something were to happen to your company (like Enron).  I think advisors say to have less than 10% of your retirement assets in your company stock or options.

I would put enough money into your 401k to get a match if there is one, then try to contribute the max to a ROTH IRA for both of you ($5k each) every year.  Then after that you could use some money to buy options and put more in your 401k.

Post # 4
14496 posts
Honey Beekeeper
  • Wedding: June 2011

It really depends on your company and how much risk you want to take, and like MissAsB pointed out, how good the option price is.  Personally, I’d max out my 401k and Roth before doing anything else.  Even without the company match, 401k contributions are pre tax, so off the bat, you essentially are 30-35% (depend on your tax bracket) up on post tax money.  So in order for your option to be a good deal, it already has to gain 30-35% to be the same value as the 401k contribution.

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