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by Undo Capital
December 15, 2025
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What are Phantom Options?

Phantom options are cash-based incentives that mirror the value of real share options, giving financial rewards without issuing actual shares.

Phantom Оptions Мeaning

The phantom options' meaning centres on offering equity-like upside without changing the cap table. To define phantom options in practice, the company grants participants a right to receive a cash payment that reflects the increase in share value over time, often triggered by an exit or liquidity event. A clear phantom options definition is important because it avoids the legal, tax and administrative complexities of issuing real equity, making them ideal for international employees, contractors or senior executives. Phantom options stand for flexible, non-dilutive incentive alignment tied to company growth.

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Disclaimer: Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. We do not provide investment advice, financial advice, or tax advice, nor are we regulated by the Financial Conduct Authority (FCA). Participating in startups and early-stage enterprises carries inherent risks, including limited liquidity, absence of dividends, potential loss of investment, and dilution. Any decisions regarding investments should be made independently by the investor as part of a well-diversified portfolio.