Can I exercise my put if a company goes bankrupt?
according to the Options Industry council ( http://www.optionseducation.org/tools/faq/splits_mergers_spinoffs_bankruptcies.html ) put options  the shares (and therefore the options) may continue trading OTC but if the shares completely stop trading then: if the courts cancel the shares, whereby common shareholders receive nothing, calls will become worthless and an investor who exercises a put would receive 100 times the strike price and deliver nothing. The reason for this is that it is not the company whose shares you have the option on that you have a contract with but the counterparty who wrote the option. If the counterparty goes bankrupt then you may not get paid out (depending on assets available at liquidation - this is counterparty risk) but, unless the two are the same, if the company whose shares you have a put option on declares bankruptcy then you will get paid
Safe deposit boxes are rented out to customers, and their content is not bank's property. Money deposits are not being taken by the creditors if a bank goes bankrupt, for the same reason - its not bank's money, it belongs to the depositors. However, frequently banks go bankrupt because they do not have enough cash at hand to pay back the depositors. In this case, unless insured (up to $250K in the US, EUR100K in EU), some or all of the deposits may not be immediately (or even at all) available. Depositors become creditors of the bank in the bankruptcy proceedings. Safe deposit box, however, is rented to the customer, and the content is not removed by the bank to be used elsewhere, as happens with monetary deposits. So even if the bank is bankrupt and doesn't have enough money to cover the monetary deposits, the content of the safe deposit boxes doesn't magically disappear, and the owner can get it back. The access to the deposit box itself may be limited due to the bankruptcy, but the content will remain there waiting for its owners. In the United States, when a bank goes bankrupt, FDIC takes over it and its assets. Safe deposit box rental contract is an asset. It is taken over by the FDIC and will be sold to a buyer (usually as a part of the whole branch where the box is located), who will continue operating/servicing it. You should see what your average weekly purchases are and set that aside in your checking/current account, then you should typically not be in danger of overdrawing. Doing this exercise will also help you get a better understaning of your spending and spending habits. For example if on average you spend $500 USD a week then put say $575 USD in your current account and you should not be in danger of over drawing and then having to go into your online account and make the transfer. I always tell people to setup a budget and to stick to it as best as they can, earmark money for dining out, entertainment, anything they can think of that they would spend money on, this way they can keep track of where it goes and how often and quick it goes. &gt;Hate to break it to you but it's the republican policies of deregulation and tax cuts we can't afford that got us this shit sandwich.   Not even close. 1.1Trillion/year deficit is NOT related to taxes, it's related to increased spending while yes, tax revenues fall a bit. But you don't take actions that will make tax revenues fall more. Putting additional burdens on companies doesnt yield more tax revenue. If it did, why not tax them at 90%? But then guess what happens along that chart curve? There are no companies left.  How much in additional taxes could we take in? 100 billion conservatively? Ok genius, what about the other $1 Trillion/year? WE SPEND TOO MUCH!  &gt;Really? Seems to me like a person living paycheck to paycheck would actually have a very good idea of what it's like to live on the edge of bankruptcy  Except for most people close to bankruptcy they never had any capital to begin with. They lived pay check to pay check, using credit cards, buying houses, buying cars.   Businesses must keep a MUCH larger cushion of liquid capital and assets and must plan YEARS in advance. ---very few individuals do this or ever will.   The only correlation is that more and more liabilities are not meeting income. Except when an individual goes bankrupt it's mostly on them. If a company goes bankrupt it can effect hundreds or thousands of employees AND the company. An indivdual going bankrupt won't then bankrupt their creditors or vendors but a company going bankrupt very well could.   I don't know if you knew this, but the United States itself is bankrupt.... We can't meet liabilities with the current income. That doesn't mean increased taxes to increase income. It means reducing liabilities and creating an envionment where those who bring in the revenue can expand.   What we're talking about here is companies receiving additional burdens, not less, thus there is an incentive to decrease liabilities where possible, sell or close if necessary. "I don't agree that the market as a whole is a ponzi scheme, but there are some ponzi-like aspects to it. If you buy high quality stocks like Coca Cola, Johnson and Johnson, AT&amp;T, Verizon, Kraft, Wells Fargo (the vanilla bank, not one of the crazy ones), IBM, Berkshire Hathaway etc and simply hold onto them for the next 10-20 years, you will make money. Even over the last decade, when stocks ""went nowhere"", you still came out ahead through the dividend payments. It was just at an unsatisfactory rate of return. Also ""the market"" consists of a lot more than just stocks. Corporate bonds are a big market and I always recommend people to look at bonds. If you cannot judge whether a company is credit worthy, how can you invest in the common stock? I've made a lot more money myself in the bond market than in the stock market.  However, for many stocks, they do look a lot like ponzi schemes. This is true, in particular, with many of the tech stocks (Cuban was a tech investor, so that is probably where his sentiment is coming from). You have many of these companies that create great products. However, they never have positive cash flow because all the money is spent to develop new products. As the share price goes up, the company issues new shares to fund research, stock options to employees to enrich them, etc. However, eventually, they run into a string of bad research that do not yield a new product and the share price plunges. Perhaps the company goes bankrupt. So you have a company that developed great products, but the shareholders never got a penny in dividends and the final shareholders have paper worth zero.  Take a look at Research in Motion for example. Creating the Blackberry has to be one of the biggest successes in tech over the last decade. However, has the shareholders gotten any richer? Only if they traded amongst themselves, nobody got a dividend. What happened to the many billions of dollars they made during the peak popularity years of Blackberry? It went to executives, employees, and was squandered on development that did not effectively defend the phone's dominant market position. Now the stock price is back down to the pre-prime years, and if a shareholder held onto it throughout the entire period, he would not have received a single penny. And this is a profitable enterprise, things look even more bizarre when you start looking at the tech companies that have NEVER had a positive earnings quarter and no plans to ever have positive earnings (something like Pandora comes to mind). Often, management at these more bizarre companies run the company as a toy - to play with their own ideas and to issue themselves stock as compensation. And of course, they sell a lot of the stock to cash in before they delve into the next risky venture. They have no intention of ever enriching anybody who holds into the stock in the long run. If for some reason they make money, they will put it all into their next toy project until one of them fails and wipes everything out.  If you invest in a profitable business with reasonable management, you will generally come out ahead. Some businesses get displaced by unpredictable circumstances and they go bankrupt. But on average, if a company is good at doing something and they pay out the earnings, you come out ahead. You get in trouble when businesses are good at something, and they take all the money they make and put it into doing something they are not good at. A business might only provide good cashflow for 10-20 years when the product is popular and before competitors cut into margins. If that money is squandered, the long term shareholder may ultimately have very terrible results. The long term shareholder ends up being the guy who keeps going all-in on a 80%-chance-to-win bet (that is what management is doing when they bet the company on the next unproven product), but eventually he gets zeroed out on one loss.  This is why if you look at Buffett's investments, they are all in simple businesses that spits off cash to the owner/shareholder. Businesses like soft drinks, snacks, rail roads, vanilla banking, utility-like energy companies, insurance, etc. You might be good at judging the odds of whether a business will succeed or not (aka make more money than your original investment or not). But you don't want management of that company to make a wildly different bet for you. Just because they are great at operating a company doesn't mean they are good enough at judging odds or disciplined enough to make those bets for you. I may have predicted accurately that Business X will be a great success, but if manage takes those profits and goes all in on Business Y, without giving me a chance to cash out, that may have disasterous results." Stock options represent an option to buy a share at a given price.  What you have been offered is the option to buy the company share at a given price ($5) starting a given date (your golden handcuffs aka vesting schedule). If the company's value doubles in 1 year and the shares are liquid (i.e. you can sell them) then you've just made $125k of profit.  If the company's value has gone to zero in 1 year then you've lost nothing other than your hopes of getting rich. As others have mentioned, the mechanics of exercising the option and selling the shares can typically be accomplished without any cash involved.  The broker will do both in a single transaction and use the proceeds of the sale to pay the cost of buying the shares.  You should always at least cover the taxable portion of the transaction and typically the broker will withhold that tax anyways.  Otherwise you could find yourself in a position where you have actually lost money due to tax being owed while the shares decline in value below that tax.  You don't have to worry about that right now. Again as people have mentioned options will typically expire 10 years from vesting or 90 days from leaving your employment with the company.  I'm sure there are some variations on the theme.  Make sure you ask and all this should be part of some written contract.  I'm sure you can ask to see it if you wish.  Also typical is that stock option grants have to be approved by the board which is normally a technicality. Some general advice: Is the parent company's common stock public?   If not, then there will be absolutely no pressure from everyone liquidating at the same time. If so, consider the average daily volume of transactions in the parent company's stock.  Is it much greater than the volume your 10k co-workers will have to liquidate?   If so, I wouldn't expect much of an impact from all liquidating at once. Any other situation, you are probably right to be a bit worried about simultaneous liquidation.   If this was my case, I'd probably submit a limit sell order so as to try and pick out a high for the timing of my liquidation, and lower my limit vs fair value as it got closer to the expiration of your ability to hold the parent company stock. "Generally ""default"" means that the company cannot pay off their debts, and since debt holders get paid before equity holders, their equity would be effectively worthless. That said, companies can emerge from Chapter 11 bankruptcy (reorganization) and retain equity value, but it is rare. Most times, stocks are de-listed or frozen on stock exchanges, and company's reorganization plan will cancel all existing equity shares, instead focusing all of their attention on paying back as much debt as possible. If the company issues new equity after reorganizing, it might provide a way for holders of the original equity to exchange their shares for the new equity, but it is rare, and the value is usually significantly less that the value of the original equity." "The short version of JB King's excellent answer is that the company will typically buy back shares from the open market at market price. Sometimes, it will specifically target larger stakeholders, even controlling interests, who are making noise that they want to divest; if such an investor were to just dump their stock on the open market, neither the investor nor the company would be very happy with the resulting price collapse. In those cases, the company may offer an incentive price above market rates. In recent times, the investor looking to divest has often been the U.S. Government, who received stock in return for bailouts, and (with notable exceptions) turned a modest profit on many of them. Not enough to break even on the entire bailout, but the Government didn't just throw $700 billion in taxpayer money down a hole as conservative pundits would have you believe. In the '80s, a specific type of buy-back was made famous, called the ""leveraged buyout"". Basically, the company took out a huge loan against itself, and used that money to buy up all the company's publicly-traded shares, essentially becoming a private company. This became a popular tool among private equity groups, for better and worse."