In brief
Restricted stock units and stock options are both called "equity," and they are almost opposite instruments. One is a promise of shares; the other is a right to buy shares at a fixed price. Confusing them is expensive.
RSUs: shares on a schedule
An RSU is a commitment to give you shares when it vests. You pay nothing to receive them. When they vest, their value is taxed as ordinary income, and shares are usually sold or withheld to cover the tax automatically. If the stock falls, your RSUs are worth less but never nothing, as long as the company is worth something.
Options: a coupon you pay to use
An option is the right to buy a share at the strike price. If the stock is worth more than the strike, the option has value; if not, it is underwater and worth nothing. Exercising costs real money, and at a private company it buys shares you cannot sell. The tax treatment — ISO versus NSO — changes what you owe and when, and the differences are large enough to justify professional advice.
Continued
“An RSU is a paycheck denominated in stock. An option is a bet you pay to place.”
How to weigh them
RSUs are worth something in almost every outcome; options are worth a great deal in good outcomes and nothing in mediocre ones. At a mature public company, RSUs are close to cash. At an early-stage startup, options are leverage, and most leverage expires worthless.
Neither is better in the abstract. What matters is the stage of the company, the strike price against the current valuation, and how much of your financial life is already tied to your employer. The equity audit on the stay-or-go page models both, so the trade-off is a number rather than a feeling.