Question

Employee stock options (ESOs) have been compared to regular stock call options (SO).

Among the similarities are (chose one):

a) ESOs and SOs can be bought and sold.

b) ESOs and SOs can be calls or puts.

c) ESOs and SOs rise in value when volatility increases.

d) ESOs and SOs typically expire in a few years or less.

e) ESOs and SOs typically vest in a few days to weeks.

Answer 1

The correct answer is option c) ESOs and SOs rise in value when volatility increases.

The value of call options both ESOs and SOs icnrease when the volatility increases. This is a similarity between ESOs and SOs.

Option a) is incorrect because ESOs cannot be bought and sold as the SOs

Option b) is incorrect because ESOs can only be call options, but SOs can be both calls and puts

Option d) is incorrect because SOs typically expire within a month or even weekly

Option e) is incorrect because SOs do not have a vesting period