Stock Option

Business / Taxes / Stock Option: 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. The exact terms are spelled out in the contract. The same contract obligates the seller, also known as the writer, to meet its terms to buy or sell the stock if the option is exercised. If an option isn't exercised within the set period, it expires. The buyer pays the seller a premium for the privilege of having the right to exercise, and the seller keeps that premium whether or not the option is exercised. The buyer has the right to sell the contract at any point before expiration, and might choose to sell if the sale provides a profit. The seller has the right to buy an offsetting contract at any time before expiration, ending the obligation to meet the contract’s terms. Stock options are also a form of employee compensation that gives employees — often corporate executives — the right to buy shares in the company at a specific price known as the strike price. If the stock price rises, and an employee has a substantial number of options, the rewards can be extremely handsome. However, if the stock price falls, the options can be worthless. Often, there are time limits governing when employees can exercise their options and when they can sell the stock. These options, unlike equity options, can’t be traded among investors.

Other Words for Option

Option Noun Synonyms: choice, selection, alternative, recourse, opportunity, way out
Option Adjective Synonyms: choice, privilege, election, opportunity, chance
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Other Words for Stock

Stock Noun Synonyms: pedigree, bloodline, house, dynasty, (line of) descent, genealogy, extraction, roots, lineage, family, ancestry, parentage, breeding, heritage
Stock Adjective Synonyms: livestock, (domestic or farm) animals, cattle, beasts, horses, cows, oxen, sheep, goats
Stock Verb Synonyms: supply, store, inventory, stockpile, reserve, reservoir, cache, hoard, wares, merchandise, goods, selection, assortment, range, variety, array
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Incentive Stock Option (ISO)

Business / Taxes / Incentive Stock Option (ISO): Corporate executives may be granted incentive stock options (ISOs), also called qualifying stock options. These options aren't taxed when they're granted or exercised, but only when the underlying sha MORE

Common Stock Fund

Business / Finance / Common Stock Fund: Convertible preferred stock plus convertible bonds, stock options, and warrants. MORE

Treasury Stock

Business / Accounting / Treasury Stock: Issued stock that has subsequently been reacquired by the corporation. MORE

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