the.com/stock option
The right to buy a slice of a dream later, at today's price.
means A contract giving an employee or investor the right (not obligation) to buy a company's stock at a fixed price within a set window, regardless of what the market price does later.
from 'Stock' traces to Old English 'stocc' (a tree trunk or stump) — the sense drifted from solid wooden base to 'fixed capital stock' of a business by the 1600s-1700s, the idea being a merchant's stock-in-trade, the goods and capital he stood on. 'Option' comes from Latin 'optio,' meaning choice or free choice, from 'optare,' to choose or wish. The financial sense of 'option' as a traded right to buy or sell emerged in 19th-century exchanges; 'stock option' as employee compensation is a 20th-century innovation, popularized especially by tech firms offering paper riches instead of cash.
- not a share
- you own a choice, not equity, until you exercise
- the catch
- worthless if the stock price falls below strike
- vesting cliff
- most start paying out only after year one
- expiration
- unexercised options usually die 90 days after you leave