Business and Personal Finance Dictionary

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• STOCK OPTION
  
  A stock option is an agreement that gives you the right to buy or sell a specific stock at a preset price during a certain time period. If you don't exercise the option within that time period, it expires, and you forfeit the money you paid to buy the option. You can buy stock options, which are listed on various stock and options exchanges, through your broker. Stock options are also a form of employee compensation that gives employees-often corporate executives-the right to buy shares in the company at or below market price. Often, these options are restricted, which means there are certain conditions, such as particular time periods, under which employees can exercise their options and sell the stock. If the stock price rises enough, and an employee has a substantial number of options, the rewards can be extremely handsome.
  
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