# Stock options

Concept · [Fundraising and equity](https://ecosystem.samcarlton.com/fundraising)

Also called: options, employee options, ESOP

The right to buy [shares](https://ecosystem.samcarlton.com/equity) in the company later at a price that is set today. Startups often give these to [employees](https://ecosystem.samcarlton.com/contractor-vs-employee) as part of their pay. An '[option pool](https://ecosystem.samcarlton.com/option-pool)' is the block of shares set aside for this.

**For example:** An early [employee](https://ecosystem.samcarlton.com/contractor-vs-employee) gets options to buy [shares](https://ecosystem.samcarlton.com/equity) at today's low price. If the company grows, they can buy at that old price even though the shares are now worth more.

## Connects to (9)

- [Equity](https://ecosystem.samcarlton.com/equity): Ownership in a company.
- [Vesting](https://ecosystem.samcarlton.com/vesting): Earning your shares bit by bit over time instead of all at once.
- [Cap table](https://ecosystem.samcarlton.com/cap-table): Short for capitalization table.
- [Equity vs cash compensation](https://ecosystem.samcarlton.com/equity-vs-cash): The two main ways a startup pays people.
- [Option pool](https://ecosystem.samcarlton.com/option-pool): A block of shares a company sets aside to grant to future employees, advisors and contractors, usually as stock options.
- [409A valuation](https://ecosystem.samcarlton.com/409a-valuation): An independent appraisal of what one share of a private company's common stock is worth.
- [Cliff](https://ecosystem.samcarlton.com/cliff): The first stretch of a vesting schedule, during which nothing vests.
- [Advisor shares](https://ecosystem.samcarlton.com/advisor-shares): A small amount of equity a startup gives an advisor in return for ongoing help, usually as stock options that vest over the period of the…
- [Offer letter](https://ecosystem.samcarlton.com/offer-letter): A written job offer to the chosen candidate.

> This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.

Map view: https://ecosystem.samcarlton.com/stock-options