Quiz
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
C
Capped Option

A stock option in which you must exercise the option after the price of the stock has appreciated by a specific amount since the grant.

Example: Your exercise price is $10 per share. You must exercise when the stock price increases by 400%, to $40.

For companies with more volatile stock prices, such as those in the biotech industry, capped options can have a lower earnings charge than traditional stock options. The discount in the valuation for capped stock options increases as the expected volatility increases. In addition, if the cap is set at a level that still produces an attractive return, it does not affect the grants' perceived value to employees. Capped options are also sometimes called barrier options.

Return to list Register Now

Try the new myStockOptions.com Glossary App! Now available for Android and iOS.

Get it on Google Play
The content is provided as an educational resource.
myStockOptions.com shall not be liable for any errors or delays in the content, or any actions taken in reliance thereon.
Copyright © 2000-2018 myStockPlan.com, Inc. U.S. Patent 7,353,200.
Contact editors@mystockoptions.com for licensing information