Cashless Exercise
A transaction that is used when exercising employee stock options (ESO). Essentially, what you do here is borrow enough money from your broker to exercise the options. You then simultaneously sell enough shares to pay for the purchase, taxes, and broker commissions. Investopedia Says:
What you are doing is technically called buying on margin. The brokerage lets you buy on margin in this case because they know there will be a quick repayment. The advantage of this technique is you don't need the cash on hand. Related Terms:
Employee Stock Options (ESO)
Employee Stock Ownership Plan (ESOP)
Exercise
Incentive Stock Option (ISO)
Nonqualified Stock Option (NSO)
Option
Stock Appreciation Rights (SARs)
Vesting |