Stock options

A type of compensation that you may receive from your company that allows you to purchase shares of stock at a predetermined stock price. You can exercise your option to buy company stock at a specific exercise price, although you aren’t required to do so. In general, the hope is that your company stock’s fair market value will have increased by the time you are able to buy shares at your exercise price, thus receiving a deep discount on your purchase. Stock options generally come in two types, Non-Qualified Stock Options and Incentive Stock Options.