Stock Options Opened for ‘Call Writing’

http://online.wsj.com/article/SB124595453317955285.html#articleTabs%3Darticle

 

The SEC has made a ruling that will allow employees to sell their stock options. Before this ruling, employees could not exercise their share holdings unless they owned actual shares.

 

There are pros and cons to this ruling that the SEC has passed.  The most obvious pro would be that now, the employees can create income for themselves through these stock options that their employer has given them.  If this ruling was passed earlier, a lot of people would have money to fall back on in these hard economic times that our country is dealing with at the moment.  That is, if they decided to exercises their rights to sell their stock.  Of course, many people lost a lot of money due to the fact that they couldn’t exercise their stock options before the market crashed in 2008 because it was illegal.  However, if they were allowed to exercise their stock options many people would have before their companies folded.  Since this was illegal, employees of the companies whose stock crashed didn’t even have an option to sell their stock, and ultimately lost all the money they had invested in the company they work/worked for.

 

The one downside to this law being passed is the purpose behind stock options.  Companies give employees these stock options so that their intentions are parallel with the stockholders of this company.  The question I pose is:  Will people that exercise their stock options have less interest in the path the company is taking?  And although I don’t think this will increase insider trading since scandals such as insider trading usually come from higher up on the chain, I do think that this could affect the allied interests between the employees and employers.

 

POSTED BY JASON KLETZKY and STEVE KILLION