I had a similar experience, a VC bought "preferred stock" (I can't remember the exact jargon), when the company was sold, the payout went entirely to the VC, and no standard stock holders received anything.
And this is how most people are screwed. Most folks receive options and never even see the financing docs or stock plan, so they don't have a shred of knowledge about the capital structure.
(Not picking on you, except by way of example. Your situation is all-too-common.)
I'm sure every time you disagree with her about something you get to hear about how she was right about the stock options.
not really. it's pretty expected.
stock options are lottery tickets.