How do stock options work when your company gets bought?

If the acquiring company decides to give you company shares, either you will receive publicly traded shares, and your situation will mimic the IPO outcome, or if acquired by a private company, you will receive private shares and you will be back in the same situation as before: waiting for liquidity.

Should I accept company stock options?

If you’re accepting a market level salary for your position, and are offered employee stock options, you should certainly accept them. After all, you have nothing to lose.

Can you use stock options to buy a house?

It’s an understatement to say using stock options to buy a house is complicated. But it’s 100% possible, and it’s an incredible alternative to using your salary as your only means of saving up for a down payment.

What does it mean to have an employee stock option?

An employee stock option that grants specified employees of a company the right to buy a certain amount of company shares at a predetermined price for a specific period.

When is the best time to sell employee stock options?

The employee exercises the options, one year later, on August 18, 2019. To benefit from the likely lower long-term capital gains rates, that employee shouldn’t sell the shares before August 18, 2020.

How are employee stock option plans taxed in India?

If the employee sells the shares after one year they are considered long term assets and are not taxable. If an employee has ESOPs in a company based abroad, when the shares are sold it will be considered short-term capital gains and will be added to the income of the employee.

Can a public company offer you stock options?

If you work for a publicly traded company (or a private company that may eventually go public), then you may be eligible for stock options. Yet many employees — including our reader who sent in this week’s question — aren’t sure how to handle them.