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Option

Option

An option gives the holder the right, but not the obligation, to buy or sell an asset at a set price.

What is an option?

An option (Swedish: option) is a financial instrument that gives the holder the right, but not the obligation, to buy or sell an asset at a set price (the strike price) within a certain period. A call option gives the right to buy and a put option the right to sell. The issuer takes on the corresponding obligation.

 

Options in unlisted companies

In unlisted companies, options are often used in incentive programs, for example warrants and employee stock options. The terms and any vesting govern when the holder can receive shares or compensation.

Record options
Henrik Kristensen, NVR
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Related terms

Call option

A call option gives the holder the right, but not the obligation, to buy a share at a set price.

Warrant

A warrant gives the right to subscribe for new shares in a company at a set price.

Employee stock option

An employee stock option gives an employee the right to buy shares in the company in the future.

Strike price

A strike price is the predetermined price per share at which an option entitles the holder to trade.