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Stock options give investors the right to buy or sell a specific number of shares of company stock at a pre-set price, for a fixed time period. The time period is known as a vesting period, and usually spans 3 to 5 years. During this time frame, certain percentages vest which means that you've earned the shares. However, you will still need to exercise the options, in essence purchasing them. It is important to note that there is no obligation to buy or sell for the investor. It is merely an option for the investor, one with potential big advantages. How do stock options work though? Let's take a deep dive in and review what you can use stock options for and how to potentially cash in early.
How Do Stock Options Work?
Stock options are a great way to retain employees or bring in prospective employees. Employees who have been given stock options have higher incentive to stay with a company. This is because the options aren't vested until a certain timeframe. Options won't be granted to the employee until the end of the scheduled vesting period.
