What do Stock options mean at a brand new start up

Question

I started working at a small start-up company and have been given options that vest in a year. What does it mean if it is not a publicly traded company yet? How much does a biotech type company usually start at.

I just have no idea what to think about this.

Answer 1

The hope is that it will eventually be publicly traded.  Until then you just hold on to them.  Of course there is a chance, pretty good actually, that it may not last long enough to become publicly traded in which case they are just a dream.  

Answer 2

In a private company, there is not much liquidity for your shares and options. i.e. No easy way to sell them, only very few people may know about the company. If you want to sell your shares, you will usually not find any buyers. All you can do is hold on to them till company goes public. If you are confident about company's prospects, not a bad bargain. There are good number of millionaires who got their money by hanging onto stock options. If you are not confident about the company's prospects, then yes those options are worthless (and on top of that you need to look out for another job).