Standardized loan options to purchase employee stock options

Question

I am curious whether there are standardized loans (kind of like margin loans) that are issued to purchase employee stock options.

E.g. let's say I have little or no cash available but have 10,000 options strike price $1. The company is publicly traded, so the asset is liquid immediately (i.e. better collateral). In order for me to take advantage of the options, I would need $10,000 + the tax withholdings and all the other costs. But I would be able to sell the shares immediately.

I would think this would be a loan of little or no risk. In the above scenario, are there common solutions in the financial markets to allow a low cash option holder take advantage of the opportunity? Better yet, do brokerages nowadays offer all-in-one transactions to buy the options and sell the shares for you all in one strike so that you don't have to do multiple transactions from multiple banks/brokerages?

Answer 1

What you want is a cashless transaction. It's part of the normal process. My employer gives me 1000 options at $1, I never need to come up with the money, the shares are bought and sold in one set of transactions, and if the stock is worth $10, I see $9000 less tax withholding, hit the account. No need for me to come up with that $1000.