A contract giving an employee or investor the right to purchase company shares at a fixed price for a specific period, typically used as compensation or investment incentive. Employee stock options usually vest over time and serve to align worker interests with company performance.
Combines 'stock' from Old English 'stocc' (trunk, stake) referring to company shares, and 'option' from Latin 'optio' (choice). Employee stock options emerged in mid-20th century American corporate compensation, becoming widespread in tech companies during the 1980s-90s as a way to attract talent with equity upside.
Stock options can make employees millionaires overnight or leave them with worthless pieces of paper—it's like getting lottery tickets as part of your salary! The catch is that options are only valuable if the company's stock price rises above the 'strike price,' making everyone a cheerleader for company success.
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