An option in which the underlier is the common stock of a corporation, giving the holder the right to buy or sell its stock, at a specified price, by a specific date. It is also called equity option.
Stock options from your employer give you the right to buy a specific number of shares of your company's stock during a time and at a price that your employer specifies Both privately and publicly held companies make options available for several reasons:
- They want to attract and keep good workers.
- They want their employees to feel like owners or partners in the business.
- They want to hire skilled workers by offering compensation that goes beyond a salary. This is especially true in start-up companies that want to hold on to as much cash as possible.