Stock options are a type of equity compensation that allows employees to purchase shares of stock shares at a pre-set purchase price, called an exercise price or strike price. Stock options typically vest over a number of years to encourage retention and incentivize employees to participate in and reap the benefits of the company’s success. Many companies will include them as part of a compensation plan for prospective employees. Because the exercise price stays the same, if the value of the stock goes up, employees could make money on the difference.