Copyright © Philip M. Parker, INSEAD. Terms of Use.
Definition: Stock Option |
Stock OptionNoun1. The right to buy or sell a stock at a specified price within a stated period. Source: WordNet 1.7.1 Copyright © 2001 by Princeton University. All rights reserved. |
| Domain | Definition |
Finance | The right to buy or sell shares at a certain price at a time in the future. Source: European Union. (references) |
| An option given to an employee to buy stock of the company at a lower price than the current market price, at some time in the future. Source: European Union. (references) | |
Source: compiled by the editor from various references; see credits. | |
(From Wikipedia, the free Encyclopedia)
For example I may own an option to buy a share in XYZ corp. for $100 in one months' time. If the actual stock price at the time is $105 then I would "exercise" (i.e. use) my option and buy a stock from whoever sold me the option for $100. I could then either keep the stock, or sell it in the open market for $105, realising a profit of $5. However if in one month's time the stock price was only $95, I would not exercise my option, as if I really wanted a share in XYZ Corp, I could buy it in the open market for $95 rather than using my option to buy it for $100. Thus if I have an option, I might make a profit and am certain not to make a loss. This means an option must have some positive monetary value itself. The problem of calculating exactly the how much that option is worth has been the subject of much academic and practical interest for the last 40 years. The most popular method used in the financial markets is to use the Black-Scholes formula, but this depends on the option style.
Options themselves are traded as securities on stock exchanges. Stock options for the company's own stock are often offered to upper-level employees as part of the executive compensation package, especially by American business corporations. Because stock prices are related to corporate earning, the granting of stock options gives an employee an incentive to increase earnings, either in reality or possibly by the use of creative accounting. It is estimated that over-reporting of income by an average of 25% by American corporations was one cause of the Stock Market Downturn of 2002.
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External links
Source: adapted by the editor from Wikipedia, the free encyclopedia under a copyleft GNU Free Documentation License (GFDL) from the article "Stock option."
| Domain | Title |
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Source: compiled by the editor from various references; see credits. | |
| Subject | Topic | Quote |
Economic History | Belgium | To partly offset the increased labor costs which go with a tight labor market, the Belgian Government introduced stock option legislation for salaried employees in 1999. (references) |
Source: compiled by the editor from ICON Group International, Inc.; see credits. | ||
Expression using "stock option": incentive stock option. Additional references. | |
| Source: compiled by the editor from various references; see credits. |
| The following statistics estimate the number of searches per day across the major English-language search engines as identified by various trade publications. Hyperlinks lead to commercial use of the expression at Amazon.com. |
| Language | Translations for "stock option"; alternative meanings/domain in parentheses. | ||||||||||||||||
Danish | tegningsrettighed (pre-emption, pre-emption right, preemptive right, preemptive subscription right, stockholder's pre-emptive right, subscription option, subscription right), aktieoption (option, share option). (various references) | ||||||||||||||||
Dutch | premie-affaire (option, share option), optierecht (pre-emption, pre-emption right, preemptive right, preemptive subscription right, stockholder's pre-emptive right, subscription option, subscription right), optie op aandelen (subscription option), aandelenoptie. (various references) | ||||||||||||||||
French | stock option, option sur titres, option sur action, option de souscription, affaire prime. (various references) | ||||||||||||||||
German | Prämiengeschäft (option, share option), Optionsgeschäft (option, share option), Option auf die Zeichnung von Aktien (subscription option). (various references) | ||||||||||||||||
Greek | παραχωρημένο δικαίωμα εγγραφής (subscription option), δικαίωμα επιλογής σε μετοχές (option, share option), "οψιόν" σε μετοχές. (various references) | ||||||||||||||||
Italian | opzione di sottoscrizione (subscription option), affare a premio (option, share option). (various references) | ||||||||||||||||
Pig Latin | ockstay optionay opção de subscrição (subscription option), negócio a prémio (option, share option). (various references) opción de suscripción (subscription option), negocio a prima (option, share option), derecho de opción sobre acciones (option, share option). (various references) | ||||||||||||||||
Scrabble® Enable2K-Verified Anagrams | |
| Words within the letters "c-i-k-n-o-o-o-p-s-t-t" | |
-2 letters: cooptions. | |
-3 letters: cooktops, cooption, spittoon, stinkpot, stockpot, tipstock, topknots. | |
-4 letters: cooktop, cottons, inkpots, opsonic, options, pocosin, potions, topknot. | |
-5 letters: contos, coopts, cotton, inkpot, nostoc, octopi, optics, option, picots, pinkos, pinots, pintos, piston, pitons, points, poison, postin, potion, pottos, ptotic, spinto, stinko, stotin, tincts, tocsin, tonics, topics. | |
| Source: compiled by the editor from various references; see credits. SCRABBLE® is a registered trademark. All intellectual property rights in and to the game are owned in the U.S.A and Canada by Hasbro Inc., and throughout the rest of the world by J.W. Spear & Sons Limited of Maidenhead, Berkshire, England, a subsidiary of Mattel Inc. Mattel and Spear are not affiliated with Hasbro. | |
| 1. Definition 2. Usage: Commercial 3. Quotations: Non-fiction 4. Expressions | 5. Expressions: Internet 6. Translations: Modern 7. Anagrams 8. Bibliography |
Copyright © Philip M. Parker, INSEAD. Terms of Use.
