Stock Options 101: A Beginner's Guide to Understanding Your Equity

Equity can be a significant part of your compensation, especially at startups. It's important to understand the basics.

**Stock Options:** These give you the right to buy a certain number of company shares at a fixed price (the "strike price"). You hope that the company's value will increase, so you can sell the shares for a profit later.

**RSUs (Restricted Stock Units):** These are a promise from the company to give you shares of stock at a future date. Unlike options, you don't have to buy them.

**Vesting:** This is the process of earning your equity over time. A typical vesting schedule is over four years with a one-year "cliff," meaning you don't receive any equity until you've been with the company for one year.

Understanding your equity is a crucial part of evaluating a job offer.