Stock represents legal ownership of a portion of the income and assets of a corporation.
A stock option is a legal contract that gives the holder the right to buy a fixed number of shares of the employer's stock at a fixed price that may be exercised during a fixed period of time. A stock option is granted when the employer, usually through action of its Board of Directors, sets the number of shares, exercise price and duration of the option. But the option contract can state a later effective date for the option. They can then sell the stock for cash and realize a profit. The holder of a stock option generally has none of the rights of a shareholder like voting or dividend rights unless and until the stock option is exercised and the stock is issued.