What is an option

At the beginning of this month, ByteDance2018After determining the annual employee performance and year-end bonus amount, a new round ofoptionSwap. During the option swap period, employees with ByteDance can use their year-end bonus to44The discount price of the US dollar is exchanged for a corresponding number of options,10Stock exchange, exercise price per share0.02USD, the exchange limit cannot exceed oneself2018The total amount of year-end bonuses. That is to say, the stock price at the last exercise of ByteDance employees is per share44.02USD. Today, let's talk about what this swap option is.

Option, in essence, is a right granted by a contract to the holder to purchase or sell an asset at a fixed price on or before a specific date. Each option must include the buyer and seller, the underlying asset, the exercise price, the quantity and the exercise time limit. The buyer of this option buyback is an employee, the underlying asset is the company stock, and the exercise price is44.02USD, each person cannot purchase options worth more than their year-end bonus.

Options can be divided into call option and put option according to their rights;Divided into European options and American options based on their types;According to the exercise time, it is divided into European options, American options, and Bermuda options. In addition to the division of rights by term, it can also be divided into stock options based on the subject matter of the option contractstock market indexOptions, interest rate options, commodity optionsforeign exchangeOptions, etc. Experts from Linlong Group pointed out that options can also be divided into four types: call option, put option, put option, and put option. Investors can use these rights or choose to give up, and sellers must make corresponding countermeasures based on the behavior of buying a house.

Among these categories, call option and put option are more important and frequently used. Taking call option as an example, if the employee thinks that the stock price of ByteDance will rise in the future, suppose that the employeeAGive10Purchased in US dollars10The exercise price per share is44.02Options of USD, ByteDance gains10USD. When the future ByteDance stock price becomes46When in US dollars, employeesAThere are two options:

1, exercise options, then the ByteDance must be44.02Selling company stocks to employees at a price of $per shareAEmployeeAAdd this10Sell stocks to others and earn money46*10-44.02*10-10=9.8The dollar, even if the ByteDance does not have its own share of stock at this time, it also needs to go to the market to46Purchase at a price per share in US dollars10Share, ByteDance loss9.8dollar;

2Put Option, EmployeeAwith46Sell your own ByteDance option at the price of USD to make a profit9.8USD.

Put option is the opposite. Generally, options are divided into four stages: grant, maturity, exercise, and realization. However, this ByteDance ingeniously realized that the company's cash flow was not much lost and employees were encouraged through option repurchase, which is a win-win situation.