stock option definition

An executive stock option is a contract that grants the right to buy a specified number of shares of the company's stock at a guaranteed "strike price" for a period of time, usually several years. Stock option backdating definition January 15, 2021 / Steven Bragg. Option Contract Specifications . A seller of the stock option is called an option writer, where the seller is paid a premium from the contract purchased by the stock option … Stock option definition: A stock option is an opportunity for the employees of a company to buy shares at a... | Meaning, pronunciation, translations and examples Generally, the following are its components – #1 – Strike price – Strike Price is the price for which options are purchased or getting written. Definition of stock option in the Definitions.net dictionary. American Heritage® Dictionary of the English... Stock option - definition of stock option by The Free Dictionary. Let’s take a look at an example. Definition: The Stock Option is a security that gives the right to its holder, but not the obligation to buy or sell the outstanding stocks at a specific price and a specific date. (A) Vesting/Right to Exercise. A stock option, or equity option, is a contract that gives its buyer the right to buy or sell a specific stock at a preset price during a certain time period. A stock option should be granted under a written stock plan that is approved by shareholders within 12 months of the date it is adopted by the company's board of directors. Definition: The Delta of an option is a calculated value that estimates the rate of change in the price of the option given a 1 point move in the underlying asset. The strike price is generally set lower (often much lower) than what people expect will be the future value of the stock, which means selling the stock … Questions about grammar and vocabulary? n. A right to buy or sell specific securities or commodities at a stated price within a specified time. A non-tradeable call option giving an employee at a publicly-traded company the right to buy shares in that company for a certain price.Stock options in this sense are often a part of compensation for major and mid-level executives in large publicly-traded companies. Investors often refer to this as the grant or strike price. ; Cashless exercise – You exercise your options and sell enough of the stock to cover the purchase price. n. the right to purchase stock in the future at a price set at the time the option is granted (by sale or as compensation by the corporation). To actually obtain the shares of stock the owner of the option must "exercise" the option by paying the agreed upon price and requesting issuance of the shares. The brokerage firm makes this happen simultaneously. Stock option backdating involves setting the issuance date of options prior to their actual issuance date. The price at which they exercise their stock options and purchase shares is set on the day the company issues the stock option. The executive is under no obligation to exercise, or use, the options, but if she decides to do so, the company must honor the contract. Join us. (See: stock, share, option) Option Type. Definition of Stock Options: If you buy or own a stock option contract it gives you the "right", but not the "obligation", to buy or sell shares of a stock at a "set price" on or before a given "date" (time period). It is only worthwhile for the put buyer to exercise their option (and require the put writer/seller to buy the stock from them at the strike price) if the current price of the underlying is below the strike price. themselves. After this date, your contract expires and your option ceases to exist. Stock Options Definition. People purchase these stock options if they believe that the stock price is likely to go up or down in the near future. An NSO, or non-statutory stock option is a type of compensatory stock that is not meant to be an ISO, or incentive stock option within the Internal Revenue Code. Stock options give employees the opportunity to purchase a specific number of corporate stocks sometime in the future. Definition of stock option noun from the Oxford Advanced Learner's Dictionary. stock option. Stock options are a form of compensation. Definition The strike price (or exercise price) is the fixed price per share at which stock can be purchased, as set in a stock option agreement. What is Stock Option Backdating? … stock option. a right given to employees to buy shares of stock in their company at a fixed price. What does stock option mean? Stock options can bring greater value to the employee. This offer doesn’t last forever, though. See more. For example, the buyer of a stock put option with a strike price of $10 can use the option to sell that stock at $10 before the option expires. ‘A true stock option plan is funded ultimately by the market’ ‘It also offered management directors equity and management employees stock options in the Smurfit Group.’ ‘He also called for companies to treat stock options as a compensation expense.’ ‘The government includes the cost of exercised stock options … noun jump to other results. The trader would have no obligation to buy the stock, but only has the right to do so at or before the expiration date. This Option is exercisable during its term in accordance with the Vesting Schedule set forth in Section 1 and the applicable provisions of this Option Agreement and the Plan. A stock option is a contract between two parties which gives the buyer the right to buy or sell underlying stocks at a predetermined price and within a specified time period. Definition of Option Vega: An Option Vega measures the change in the price of a stock option relative to a 1% change in... read more; Back Month Options Expiration : Back month stock options have more than one month before they expire. Companies can grant them to employees, contractors, consultants and investors. Find the answers with Practical English Usage online, your indispensable guide to problems in English. Stock Options are derivative instruments that provide the holder either the right to buy or sell any stock based on the predetermined stock prices regardless of the prevailing market prices. (See: stock, share, option) This Option is intended to be a Nonstatutory Stock Option ("NSO") or an Incentive Stock Option ("ISO"), as provided in the Notice of Stock Option Grant. Define stock option. 2.2 Exercise of Option. stock option synonyms, stock option pronunciation, stock option translation, English dictionary definition of stock option. Employee stock options (ESO) is a label that refers to compensation contracts between an employer and an employee that carries some characteristics of financial options. Definition: A stock option is a contract between two parties in which the stock option buyer (holder) purchases the right (but not the obligation) to buy/sell 100 shares of an underlying stock at a predetermined price from/to the option seller (writer) within a fixed period of time. There are 2 types of stock options: incentive stock options (ISOs) and non-statutory stock options (NSOs). a right given to employees to buy shares in their company at a fixed price. n. the right to purchase stock in the future at a price set at the time the option is granted (by sale or as compensation by the corporation). | Meaning, pronunciation, translations and examples If the share price for the company increases, stock options can be very profitable for the employee. Questions about grammar and vocabulary? What is an Incentive Stock Option? Information and translations of stock option in the most comprehensive dictionary definitions resource on the web. A stock option is a financial instrument that allows the option holder the right to buy or sell shares of a certain stock at a specified price for a specified period of time. These options, which are contracts, give an employee the right to buy or exercise a set number of shares of the company stock at a pre-set price, also known as the grant price. Non-statutory stock options are also known as a non-qualified stock options. Employee stock option synonyms, Employee stock option pronunciation, Employee stock option translation, English dictionary definition of Employee stock option. The option contract sets the strike price for the underlying security. stock option noun /ˈstɒk ɒpʃn/ /ˈstɑːk ɑːpʃn/ (North American English) (British English share option) jump to other results. n. A right to buy or sell specific securities or commodities at a stated price within a specified time. The following terms are specified in an option contract. An option is a type of derivative (or a financial contract) that derives its value from an underlying asset. Stock options are contracts for the right to buy or sell a certain amount of an asset (in this case, shares of stock) at a given price, known as the strike price. To actually obtain the shares of stock the owner of the option must "exercise" the option by paying the agreed upon price and requesting issuance of the shares. Definition of stock option noun from the Oxford Advanced American Dictionary stock option noun. The difference between them is the tax treatment of the award. The most comprehensive Dictionary definitions resource on the securities exchange like other shares stock the... By the Free Dictionary shares in their company at a fixed price the employee a financial contract ) derives... 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