"if the stock tanks, they obviously don't have to exercise - if the stock launches, they win big"
There is even a little thing called a "Cashless Option Exercise" available from the brokerage firms. This requires no out-of-pocket cash to first "exercise" the option (buy the underlying stock at the strike price) before immediately selling those shares into the market. The broker firm simply subtracts the Exercise Price from the trade proceeds and delivers the Net due. So even a pauper could turn these options into cash...
No "upfront" money required to hold or sell. No Cost to hold.
Options are simply worthless until they are worth something. If the Options are "Granted" to you at no Cost, all there is is upside because there is no "opportunity Lost Cost" on the investment.
They granted themselves a number line with no values below -0-.
