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What is a stock option?

Stock options are a form of equity compensation that allows an employee to buy a specific number of shares at a pre-set price. Many startups, private companies, and corporations will include them as part of a compensation plan for prospective employees.

What are employee stock options?

Employee stock options are offered by companies to their employees as equity compensation plans. These grants come in the form of regular call options and give an employee the right to buy the company’s stock at a specified price for a finite period of time. ESOs can have vesting schedules that limit the ability to exercise.

Are stock options shares of actual stock?

Stock options aren't shares of actual stock. An employee stock option is a contract that gives employees the right to buy a specific number of shares of company stock at a specified price called the strike price, within a particular time frame known as the exercise window.

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