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Finance Glossary

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Employee Stock Options


Your employer might want to sweeten your benefits package by offering you stock options—it's a way of enticing you to work for below-market levels of cash salary. If your company makes it big, it can pay off. Otherwise, it's basically just fake money.

Your employee stock options (ESOs) give you the right to buy your company stock for a specific price by a specific date. It’s similar to a regular ol' stock option, but with two big differences:

  1. ESOs can't usually be traded on public exchanges like other options.
  2. You will usually need to be an employee for a specific period of time beforeyou can exercise your options.