Say it like this
- I received 10,000 stock options as part of my offer
- My options are underwater because the strike price is higher than current valuation
- I'm vesting my options over four years with a one-year cliff
Use it at work
Offers
- The offer includes 10,000 stock options.
- What's the strike price of the stock options?
Understanding
- Stock options let you buy shares at a set price.
- You have 90 days to exercise your stock options after leaving.
Comparing
- Are stock options worth more than a higher salary?
- Stock options are risky if the company doesn't grow.
Don't say this
Stock options are the right to buy shares, not the shares themselves. Saying just 'stocks' is imprecise.
Don't mix it up
| Term | What it is | Who writes or uses it | When |
|---|---|---|---|
| stock options | Right to buy shares at a set price | Startups | Offers |
| RSU | Shares given to you over time | Larger companies | Offers |
| equity | Ownership in general | Everyone | General term |
Practice
Try it
4 quick exercises
1. When discussing compensation packages, which phrasing is most natural?
2. My _______ vest over four years with a one-year cliff, meaning I can exercise them starting after my first year.
3. Which sentence uses stock options incorrectly?
4. Rewrite this using stock options terminology: 'I can buy company shares at a set price in the future as part of my pay.'
Say it out loud
Phrase 1 of 3
"I received 10,000 stock options as part of my offer"
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More about stock options
Real examples(3)
- in a salary negotiation
"The base salary is $120,000 plus 5,000 stock options with a $15 strike price and a four-year vesting schedule."
- in a team meeting
"Since the company just raised Series B funding, the valuation increased, which means my stock options are now worth more."
- in a one-on-one with a manager
"I want to understand the tax implications of exercising my stock options before they expire."
More mistakes(2)
Handle with care. Non-native speakers sometimes confuse stock options with equity or RSUs. Stock options are the right to buy company shares at a set price, while RSUs are shares given directly. Also avoid using as a verb.
- ✕The company stock optioned me 5,000 shares.✓The company granted me 5,000 stock options.
Stock options is a noun phrase, not a verb. Use 'granted' or 'awarded' instead.
- ✕My stock options are the same as RSUs.✓My stock options are different from my RSUs because options require me to exercise them at a strike price, while RSUs are shares given directly.
Stock options and RSUs are distinct compensation types with different tax and vesting implications.
Other forms(3)
- stock options noun (plural)
"My stock options vest monthly over four years."
- stock option noun (singular/uncountable)
"Each stock option grants me the right to purchase one share."
- stock option plan noun (in phrases)
"The company offers a competitive stock option plan for all employees."
Often used with(6)
- grant stock options · used when a company awards options to an employee
- exercise stock options · used when an employee buys shares at the strike price
- vest stock options · used to describe the process of options becoming available to exercise over time
- strike price · the fixed price at which stock options can be purchased
- underwater stock options · options where the strike price is higher than current company valuation
- stock option cliff · typically one year, after which a portion of options becomes available
Similar words(3)
- equity · broader term that includes options, RSUs, and direct share ownership
- stock grants · similar compensation but usually refers to RSUs or direct shares rather than options
- employee stock purchase plan (ESPP) · allows employees to buy company stock at a discount, but different structure than stock options
Questions(5)
- What is the difference between stock options and RSUs?
- Stock options give you the right to buy company shares at a fixed price (strike price). You must exercise them to own the shares. RSUs are restricted stock units that are shares given directly to you, typically vesting over time. RSUs do not require you to pay a strike price; they become yours when they vest.
- What does it mean when stock options are underwater?
- Stock options are underwater when the company valuation falls below the strike price. For example, if your strike price is $20 but the company is now valued at $10 per share, your options have no immediate value. This is common in startups that have struggled or down rounds.
- How do I exercise my stock options?
- To exercise your stock options, you contact your company or the plan administrator and pay the strike price to buy the shares. For example, if you have 1,000 options at a $10 strike price, you would pay $10,000 to purchase 1,000 shares. Some companies allow cashless exercises or allow you to use shares to pay for the exercise.
- Is stock options formal or informal?
- Stock options is formal and professional language used in official compensation discussions, offer letters, and financial contexts. It is appropriate for both verbal and written communication in workplace settings.
- What is a typical vesting schedule for stock options?
- A typical vesting schedule in tech is four years with a one-year cliff. This means no options vest in the first year. After one year, 25 percent vest, and then the remaining 75 percent vest monthly over the remaining three years. However, schedules vary by company.
