Hm, couldn't they do something similar to short selling? I mean, if I know that I have X shares which I can sell in 4 years, I could borrow (and immediately sell) the same amount of shares with the obligation to return them in 4 years?
I don't know if the stock option is transferable, but that would be only once it's vested. Before then, all you own is a piece of paper saying how many shares you'll be granted, when, and at what price,
assuming you manage to stay employed for that long! Why does everyone here seem to assume the employee doesn't get fired or downsized, before then?
I guess you could always take out a big loan, with plans to pay it back using the proceeds of your stock sale, when you flip the option. However, not only does that assume you stay employed that long, but also that the stock price doesn't crash.
In case people didn't know, stock options get granted based on the stock price around the time the options are issued. Sometimes, they're priced a little below market, but it's still roughly what the market price is.
By the time the option vests, the stock price could drop below the option price, which makes the option effectively worthless (i.e. because it'd cost you more to buy the stock than you could sell it for). When this happens, your options are said to be "under water".
It's not uncommon for companies to have retention problems and have to put in place a bonus plan or something, if there are a string of option grants during a long downturn of the stock, leaving many employees with worthless stock options.