However, options are far from an easy way to make money. Stock options continually lose value as they get closer to the expiration date, and if your option doesn’t move past the break-even point, it will expire and be worthless. Options are also more complicated than a buy-and-hold strategy. If you simply invest in quality stocks, you can take a long-term approach. If you trade options, you need to predict not just which way a stock price is going to move, but how soon it will happen, so you can pick the right expiration date.
As far as ESOs go, ideally, they work out well for the employer and the employee. There’s no additional cost for the employer, and the employee gets the opportunity to share in the company’s success. Of course, it’s important for a prospective employee to consider the company’s growth prospects, since stock options won’t be worth anything if the company loses value.