buying options in a privately-held company
tptacek: First, let me be "FIRST LAWYER POST" and tell you that you have to have counsel check this.Second, it's actually likely that your friend cannot sell options in the company; typical boilerplate employee stock option agreements prevent this. Without that agreement, a competitor can buy options from a former employee and wind up with common stock.Third, once your friend left the company, a clock probably started ticking on those options; they'll either expire or the company will automatically get the option to buy them back at their strike price (or some other nominal price). They may not be worth anything at all.Fourth, it may not be lawful for the private company to have non-employee shareholders; private companies are typically only allowed to sell shares to SEC accredited investors, who (simplifying) have more than $1MM in the bank or $300k+/yr in salary.Fifth, you want to seriously consider whether you even want to hold shares in a private company. Your friend was an employee, is probably last in line for liquidity, and probably has no meaningful voting rights. I have several friends who wound up paying for their employee options only to have them become worthless due to restructuring (companies can restructure, terribly dilute existing options, but issue new options to current employees to make up for them) or M&A terms.