Employee Stock Options Explained: How to Make Money with It?


Own Employee Stock Options (ESOs) but have no idea how to optimize their earning potential and how to minimize their risk? You’re not alone. Here, we will explain how we can make money with Employee Stock Options.

The problem is, there is a lot of conflicting information out there about ESOs. Some are correct but too complex to grasp quickly. Some are okay but not very informative. And some are outright wrong.

For example, did you know that the same amount of ESOs can potentially earn you $6K vs $80K per year?

To help you make the most with your ESOs, we’ve put together this simple guide.

We’ll explain:

  • What are Employee Stock Options (ESOs)?
  • Why Employee Stock Options (ESOs)  are important?
  • How to turn Employee Stock Options (ESOs)  into money;

Let’s get to it.

What are Employee Stock Options (ESOs)?

Employee Stock Options (ESOs) are your right as an employee to buy your company’s shares at an agreed-upon price and at an agreed-upon future date.

In a nutshell, you can buy your company’s stock at a lower-than-market price, then sell it and pocket the difference.

RELATED: What are Stock Options? Everything You Need to Know

Why Employee Stock Options (ESOs) are Important?

Employee Stock Options (ESOs) can mean the difference between earning $50K in 10 years or $1MM in 10 years. Wow. Hard to believe, right.

We agree.

GrowthAdvisor - Earning from employee stock options vs other financial planner

Let us illustrate with Jane’s story.

Jane’s story

Jane is a typical mid-career employee who got two job offers. The first one is from Big Company 1. The second one is from Big Company 2.

Both companies offered Jane similar compensation packages. But while Big Company 1 offered $5,000 more in salary, Big Company 2 offered 15,000 more in ESOs.

Which offer should she choose?

Jane decides she wants to choose the offer that will make her more money. But how is she to find out which one that is? Should she go with a bigger salary or with a bigger ESO package?

Let’s imagine Jane’s career as a highway. Jane is sitting in a car, at a fork in the road. If she chooses the right road, she’ll make lots of money. But if she chooses the wrong road, she’ll make very little money.

The wrong decision can cost Jane up to $1MM in 10 years. Ouch.

Luckily, Jane can use GrowthAdvisor.

Jane takes out her phone and types in Big Company 1 and Big Company 2, to compare their Wealth Earning Ratings.

GrowthAdvisor tells Jane that Big Company 1 ESOs can earn her $6,000 per year. But Big Company 2 can earn her $19,000 per year. Jane smiles. Her choice is obvious. And even better, GrowthAdvisor tells her how to negotiate her Big Company 2 ESOs to kick up their earning value from $19,000 per year to $35,000 per year.

Now Jane is positively ecstatic. She knows which road to take.

She chooses Big Company 2’s offer.

How to turn Employee Stock Options (ESOs) into money?

If you take the time to read your Employee Stock Options Plan, you’ll see terms like strike price, amount of shares, date of grant, cliff, vesting schedule, and so on. It’ll look like a long legal document. And it’ll possibly make your eyes cross.

Don’t worry. Most of this you can ignore and go back to watching your favorite TV show.

Simply use GrowthAdvisor to calculate how different companies’ ESOs can earn you different amounts of money. Done!

Final Thoughts

ESOs don’t have to be complicated.

After you’ve educated yourself on the basics, you can rely on GrowthAdvisor to crunch the data while you sleep. Simply check your account once a month or a few months to see the latest reports. Spend the rest of your time living and having fun.

Ready to give us a try?

Get started. It’s free

Questions? Ask us in comments or email our team at support@growthadvisorhq.com

Article Number: GA-21
Pre-IPO Secondary Market: Liquidating Before Going Public

Contents DEFINITION The pre-IPO secondary market is the opportunities stockholders have to liquify their equity in a private company. In contrast with a primary market where companies sell shares, secondary markets, by definition, involve shareholders selling their shares to others.     The Pre-IPO secondary market has been growing by the year, in part because more […]

What is GrowthAdvisor’s Wealth Report? How to Make More Money?

Contents Who will not want to learn how to make money quickly? Most people would love to grow wealth fast but in a risk-free way. There are different ways to make money but here we are going to help Employees learn how to use their Employee Stock Options and make money quickly. GrowthAdvisor’s Wealth Report […]

6 Best Personal Finance Software Tools (That You Need in 2020)

Content Just started managing your money but have no idea which is the best personal finance software to use? Then this is the resource for you. To find the best online finance tool, we compared over 20 of them, including our own web-hosted product GrowthAdvisor. We’ll walk you through our top 6 picks in a […]