If a Stock Option Is "Underwater" What Does That Mean

question 141

Short Answer

If a stock option is "underwater" what does that mean?
The company has experienced flood damage to its facilities and cannot pay off on any stock options.
The federal government has blocked the company from paying off stock options.
The market price of the stock that the option applies to is lower than the option price.
The market price of the stock that the option applies to is higher than the option price.
The person holding the stock option will not exercise it because it would constitute poor public relations (the option is therefore "underwater" and out of sight).

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Definitions:

Fossil Fuels

Fossil fuels are natural fuels such as coal, oil, and natural gas derived from the remains of living organisms that have been transformed over millions of years through heat and pressure.

Nonrenewable Energy Sources

Energy resources such as coal, oil, and natural gas that cannot be replenished in a short period of time and will eventually deplete.

Scarce Resources

Resources that are limited in availability and can be used in the production of goods and services.

Tradeoffs

The compromise or sacrifice of one thing in order to obtain another, often used in discussions of economic policy and individual choices.