On a basic level what are options and options trading?
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Employee stock options at their most basic form are a perk to allow employees to buy shares in their company at a discounted rate.
Let’s say a company’s share price is £1.20, they’d typically offer options at a slight discount, to aid my maths here let’s say £1.00
You as an employee sign up for £10 per month of stocks for 5 years = £600 invested. This would typically be paid direct out of salary. And depending on the tax laws of the country you’re in may be deducted pre tax for a further benefit.
If at the end of 5 years the share price has gone up to £2.00, you’ve made a £600 profit.
If they’ve gone down to £0.50 you take your £600 and walk away.
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