Stock Option

Stock Option

Stock Option may have one of the following meanings, depending the context of the term:

1. the right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate in stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of strategies.

See also other Tax Terms and Definitions in U.S.A.

call option; put option.

2. an employee stock option; a widely used form of employee incentive and compensation, usually for the executives of a corporation. The employee is given an option to purchase the corporation's shares at a certain price (at or below the market price at the time the option is granted) for a specified period of years.

See also other Tax Terms and Definitions in U.S.A.

incentive stock option; nonqualified stock option.

Description and Definition of Stock Option

A right to buy a given quantity of stock at a specified price at a later date. This popular form of employee compensation is often given to corporate executives.


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