Qualified Stock Option

See: Non-Qualified Stock Option (NSO).

A qualified stock option usually refers to the flavor of option granted to employees at an early-stage startup company, whose treatment gets long-term capital gains treatment rather than that of the higher taxed, ordinary income rate.

In a QSO, the employee can buy out the options, own the (common) stock, pay a tax on the spread from their strike price to the latest 10b5-1 price, if there is any spread, and then hold those options a year. If they do allllll that, then they get to pay meaningfully less in taxes when they then eventually go to sell the stock after the hugely successful IPO. You want QSOs much more than you want NSOs, because the tax delta, especially in Blue States, is...big.