Stock options are a type of employee incentive plan that allows employees to purchase shares of their company's stock at a predetermined price, known as the exercise or strike price. This gives employees an opportunity to benefit from any increase in the value of their employer’s stock over time. The idea is to motivate and reward employees for contributing towards the growth and success of the company by giving them a stake in its future performance. Employers may offer various types of stock options, such as non-qualified stock options (NQSO), incentive stock options (ISO) or employee stock purchase plans (ESPP).