Stock Options
Stock options are contracts that give an individual the right, but not the obligation, to buy or sell a company's shares at a predetermined price within a specific time frame. Typically offered by employers to employees as part of compensation, they can incentivize performance and align interests with company success. If the company's stock price exceeds the predetermined price, the option holder can buy shares at a lower price, potentially profiting from the difference. If the stock price doesn’t rise above the set price, the options may expire worthless, and the holder won't exercise them.
Additional Insights
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Stock options are contracts that give an individual the right, but not the obligation, to buy or sell a company's stock at a predetermined price within a specific time frame. Typically offered to employees as part of compensation, they allow individuals to purchase shares at a fixed price, encouraging them to contribute to the company's success. If the stock price rises above the option price, employees can buy shares for less than the market value and potentially profit. However, if the stock price falls, the options may become worthless, making timing and market movements crucial.