underwater optionsnoun.
Stock options in which the strike price (the price at which the employee is contracted to buy the shares) is higher than the current stock price.
Example Citation:
"Confronted with the shortcomings of their options strategies, tech companies might be expected to look around for alternatives. But they're not. The few companies that are talking publicly about dealing with their employees' underwater options are desperately looking for ways to dial back the clock to the way things were before the Nasdaq bear arrived."
—Shawn Tully, "The Party's Over," Fortune, June 26, 2000
Notes:
This term actually hails from at least as far back as the mid-80s. I decided to post it anyway because it's being used quite often in the business press these days. That's not surprising since options are a major form of compensation in the new economy and most netco stock prices have tanked. Hence the gurgling sound you hear throughout the land. -Paul
