What is a stock option plan?
A company stock option plan gives employees the right to buy shares of their company’s stock at a set price (“grant price” or “strike price”), regardless of the market price of the stock. Employees usually exercise their right to buy shares when the market price is higher than the price at which they are allowed to buy. Many exercise their options and sell the resulting shares immediately to realize a profit; others hold the options in the belief that the difference between the market price and the buy price will increase, producing a larger gain or profit. If your employer has a stock option plan, contact your stock plan administrator for details.