stock options

[trafix]

I am curious about how stock options work for the employees at some of the airlines that offer them.

I know JetBlue gives out stock options and seems they are a nice little extra to the pilots who got them when they started. How long do they have to hold on to them before they can excercise them? When they do, can they sell JetBlue stock or do they have to hold it for a certain amount of time.

I guess the reason I ask is that although stock options can be quite lucrative, they can also be risky. Do they allow you to sell the stock occasionally and put your eggs in a few different baskets? A million in stock isn't a million in your pocket until you sell it.

 

[satpak77]

actually...

A million in stock isn't a million in your pocket until you sell it.

This is a common misconception amongst the investing Public. A million in stock IS INDEED a million dollars however it is represented by stock not green dollars. So if your stock goes down, well, yes, you lost money. The people who let stocks go down 50% because "its just a paper loss, not real" are all wrong. Guess what happens when you "sell it" (your words) after your lost 50% of "paper loss?" You get exactly what your "paper" represents, the new (minus the 50% loss) balance.

Saying that stock is just paper money is like saying the digits on your ATM balance is just computer digits, not "real" until you insert your ATM card and green physical dollars come out.

Same goes for real estate, antiques, paintings, etc. You EXCHANGED physical green cash for XXXXX investment, your money has now been converted into XXXXX investment, which hopefully will grow. At whatever time, you want to RE-CONVERT XXXXX investment into green cash, since we can't buy a Hamburger at Chili's or pay the light bill with stock certificates or by bringing an antique lamp to the cash register.

However, at all times, said investment DOES represent real money, real dollars.

I personally would just rather have a larger salary (more green dollars), and then I could do whatever I want with my own money. Stock options benefit the company more than the employee, altho they "spin it" so that it appears to be the best thing since sliced bread.

do a google search for "stock options" with "street.com" and/or "fool.com" and lots of articles come back

good luck

 

[trafix]

I realize what your saying, but I would rather have the money in my account rather than the stock certificate when I get closer to having to need it.

My concern really is about diversification. If I get stock options, I would rather have the 'option' to cash some of it out and exchange it for mutual funds, cash, or whatever else so I don't turn 60 with a million in stock options and have the company go bankrupt and lose it all.

I'm just trying to get a feel for how valuable these options are when they are offered.

 

[Gulfstream 200]

stock options are great.....so long as you dont think of them as SALARY.

They are far from.

Most us schmuck pilots who get options get the type of option that matures in 2-5 years. Simply put, you can start cashing them out when they mature. Dont forget to pay your gain taxes. Another good thing is that you may donate these to charity (I have). Then you are not responsible for the gains taxes...

Beware...many say they are only good if the selling price is greater than the giving price. Stock goes down, use your options to wipe your butt.

NOW...many get different kinds of "options"...like cash out anytime kind, even when the stock drops....but you wont get these.

I myself would rather get CASH, money, greenbacks. But at the same time I treat my options as a joke, if they pan out, GREAT!! buy a nice boat or a vacation home....but they are not income..

I would cash out at least 75% as they mature. I dont think its good to treat them as retirement funds either. Too many fools have gone broke doing this. One thing options are bad about is diversification. Cash them out, pay the taxes and invest and save the cash in something other that your employer.

My motto...."cant buy groceries with stock options."

companies give them to us fools because they dont cut into thier quarterly profit numbers....which they should....

 

[satpak77]

trafix....here ya go

some articles

stock options benefit the employer more then the employee.

in almost all cases, its better to just get more money in salary (if you even have that option, this was common at dot.com jobs in the 90's)

http://money.cnn.com/pf/101/lessons/10/


http://www.fool.com/portfolios/rulemaker/2000/rulemaker000217.htm


http://www.thestreet.com/_yahoo/funds/jubak/10011828.html


Just remember stocks go up and stocks go down. Also note that SOME employers require that the retirement plan be invested in a portion of a companies stock, to show "support" of the company. Same employer may impose restrictions on selling same stock, even if its tanking.

later