equity option

Definition

An option in which the underlier is the common stock of a corporation, giving the holder the right to buy or sell its stock, at a specified price, by a specific date. also called stock option.

Use equity option in a sentence

As part of his company bonus plan, Tom was given equity options. This was a huge benefit since the company he worked for recently had its IPO.

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He took some extra money he had and decided to buy some stock, but his broker suggested an equity option instead, because it would allow him to hedge his risk with puts and calls.

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