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A comment on Ask HN: Why don’t companies offer a strike price of $0.01 on options?.

Re:Ask HN: Why don’t companies offer a strike price of $0.01... by s1artibartfast on Monday September 26, 2022 @03:39PM (#32987338)
>Why don’t companies just set the strike price at $0.01?

In your example, it would cost them 100k, or likely more.

Every option you exercise costs the company the value of the stock. If it costs you 100k, and is worth 1M, the company is loosing 900k.

If the strike price was zero, they would be losing even more.

[ Parent | on HN ]
Re:Ask HN: Why don’t companies offer a strike price of $0.01... by erikpukinskis on Monday September 26, 2022 @07:05PM (#32989767)
Why would it cost them anything? They don’t pay anything when someone exercises their options, they just sign over a stock certificate.

The shareholders maybe “lose” some value, but that’s the same as any stock offering. It’s a dilution event.

[ Parent | on HN ]
Re:Ask HN: Why don’t companies offer a strike price of $0.01... by s1artibartfast on Monday September 26, 2022 @10:48PM (#32991084)
Yes, the stockholders lose more value. Every penny you might make in stock comes out of their pocket.
[ Parent | on HN ]