Ask HN: What are stock options? What should I do with them?

Good question that most people face and are afraid to ask :)

Here are some resources to check out that have covered this well:

* Rand wrote a great post (http://moz.com/rand/understanding-stock-options-at-startups-...)

* Solid overview: http://www.danshapiro.com/blog/2010/11/how-much-are-startup-...

* This is a good book that doesn't get enough love (http://www.amazon.com/Engineers-Silicon-Valley-Startups-eboo...)

* Good high-level notes about equity in startups (part of an incredible series, read it all if you can - http://blakemasters.com/post/21742864570/peter-thiels-cs183-...)

* Venture Hacks on the "Option Pool Shuffle": http://venturehacks.com/articles/option-pool-shuffle

Stock options state that you may exercise, essentially invoke, your right to buy a stock at a given price, also known as a strike price. If you have 100 options at a strike price of $20, you have the right to buy 100 shares at $20 per share regardless of current market value of the stock. Your options also may be subject to a vesting period. This means that after a given time you are given a certain amount or percentage of options you may use. For instance if your 100 options vest over 4 years, you would have 25 options per year that you are allowed to exercise. Vesting periods can be different so ask your employer.

Here is an example:

You are given a strike price of $20 per share and decided to exercise your option. The stock is currently at $30 per share. You are now buying the stock at $20 per share. You now decide to immediately sell those shares and now make $10 per share gross profit.

All stock purchases and sale must be done through a broker.

Hope this helps.