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🌍 US & Europe · Equity & optionsUnderwater options
Also called: underwater, below water options
In one line
Options whose strike price is higher than the current share value, making them worthless to exercise right now.
In plain English
If the company's value has fallen below your strike price, exercising would mean paying more than the shares are worth. The options aren't dead — value can recover — but today they have no exercise value.
If you were explaining it to a 5-year-old
Your voucher says 'buy the toy for 10 coins', but the toy is only worth 6 now. Using the voucher would be silly — you'd overpay.
Why it matters when you sell
Underwater options give you nothing to sell today, and a down round is a common cause — a reason to understand your strike versus current value.
Related terms
Put it to use
Are my options worth anything?
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.
Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.