Stock options are a type of financial instrument that give the holder the right, but not the obligation, to buy or sell a stock at a specified price on or before a certain date. They are often used as a form of compensation for employees, but can also be traded on the open market.
There are two main ways to make money with stock options: by exercising them or by selling them. Exercising an option means buying or selling the underlying stock at the strike price. If the stock price is higher than the strike price, the holder of the option will make a profit. If the stock price is lower than the strike price, the holder of the option will lose money.