A stock option is a contract that gives the buyer the right, but not the obligation, to buy or sell a stock at a specific price on or before a certain date. Stock options are often used as a form of employee compensation, but they can also be traded on the open market.
There are two main types of stock options: calls and puts. A call option gives the buyer the right to buy a stock at a specific price, while a put option gives the buyer the right to sell a stock at a specific price. The strike price is the price at which the buyer can buy or sell the stock. The expiration date is the date on which the option expires.