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Search AdvisorFind from myStockOptions. Underwater Options What are "underwater" stock options? Why shouldn't I exercise them?

6 Options if You're Underwater on Your Mortgage

Underwater stock options have an exercise price which is greater than the market price of the underlying stock. For obvious reasons, you do not want to exercise underwater stock options, as you would being paying more for the shares than their current market price, and the exercise itself would not generate any tax loss that you could apply against other income.

Underwater

Only in extremely rare situations might you purchase stock at a price that is greater than its fair market value: See a related FAQ on the various approaches companies take to the problem of underwater stock options. Home My Records My Tools My Library. Tax Center Global Tax Guide Discussion Forum Glossary.

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