Stock option

A stock option is a contract that allows its holder to either buy or sell a certain number of shares at a specific price and within a designated time period. A call option allows the contract holder to buy shares, while a put option allows the holder to sell shares. A call option is a commonly-used form of incentive compensation, while a put option can be used to mitigate the risk of negative price swings.

Related Topics

Accounting for Stock-Based Compensation 
Human Resources Guidebook