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Employee Stock Option

An employee stock option is a contractual right the company grants, generally under a stock option plan, to purchase a specified number of shares of the company's stock at a specified price (the exercise price) for a specified period (generally between five and 10 years). Since the exercise price is the market price of the company's stock on the grant date, the option will become valuable only if the stock price goes up, thereby giving the optionholder the right to buy the specified number of shares at a discount.

It is important to note that employee stock options are different from a listed or exchange-traded options. myStockOptions.com covers only employee stock options.

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