Finance
What is Stock options?
Stock options are contracts that give you the right — but not the obligation — to buy or sell a stock at a set price by a certain date. They're used both as employee compensation and as investment or hedging tools.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains stock options.
Key things to understand
- 1An option is the right (not obligation) to buy or sell at a set price.
- 2A 'call' lets you buy; a 'put' lets you sell.
- 3Employee stock options reward staff if the company grows.
- 4Traders use options to speculate or to hedge risk.
Frequently asked questions
- What are stock options in simple terms?
- Contracts giving you the right to buy or sell a stock at a fixed price before a deadline.
- What's the difference between a call and a put?
- A call is the right to buy at a set price; a put is the right to sell at a set price.
- Why do companies give employees stock options?
- To reward and motivate staff, letting them share in the company's growth and success.