Career GlossaryStock Options
Career Definition
What is Stock Options?
The right to purchase company stock at a predetermined price (strike price) within a specified period, commonly offered as part of employee compensation.
In-Depth Definition
Stock options come in two forms: Incentive Stock Options (ISOs) with favorable tax treatment and Non-Qualified Stock Options (NSOs) taxed as regular income. Both typically vest over 4 years with a 1-year cliff.
At startups, stock options can be worth millions if the company has a successful exit (IPO or acquisition). However, at companies that fail or never go public, options may be worth nothing.
Why Stock Options Matters in 2026
Understanding equity compensation is critical for evaluating the true total compensation of an offer, especially at startups where options may represent 30-50% of your total package value.