Definitions for "Stock Options"
An option whose underlying asset is the common stock of a corporation.
Stock options are the rights given by a corporation to its employees to buy its shares at a predetermined price. If the market price of a stock rises above the strike price, employees can sell the stock on the market to gain a profit. In Japan, options were first allowed in 1997, and a growing number of companies are introducing them as a new form of compensation for executives and employees. As of June 30, more than 30% of all listed firms, including those listed on the markets for start-ups, had introduced stock options. Calculating the costs of stock options involves such factors as the current market price of a stock, the strike price, the specified period that the employee can exercise the option, and stock price volatility. For companies with volatile stock prices, such as start-ups and high-tech firms, the expenses for the stock options generally increase. Some financial officers of firms have voiced the concern that calculating the expenses of stock options is a complex matter and would become a significant burden. Unlisted companies do not have available the data necessary for the calculations, such as the stock price, so making accurate calculations would be difficult.
Options with a securities price index as the underlying asset. The index options specifies conditions, e.g. the exercise index level, the multiplier, the exercise date(s), the expiry date, etc.
Financial instrument which gives the holder the right to buy an underlying instrument (e.g. common stock) at an agreed amount