A stock option grants the holder the right, but not the obligation, to buy or sell a specific amount of shares of a company at a predetermined price, within a specified time frame. There are mainly two types of stock options—call options (the right to buy) and put options (the right to sell). Stock options are widely used in executive compensation plans and as financial instruments traded on derivatives markets.
« Back to Glossary Index
About the author
Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
Her insights simplify complex financial topics into actionable strategies for beginners and seasoned traders alike.