ESOPs

An Employee Share Option Plan (ESOP) is an equity-based deferred-compensation plan to benefit employees. Companies provide their employees with options, which in turn offer the opportunity to acquire the company’s shares at any time prior to the expiration date. Typically, that date is years in the future. The idea is that employees who own, or can buy shares at far less than current market value, have an incentive to work more diligently to help the company prosper.

Although these options are not available to most people, and they don’t trade on any options exchange, if your company offers them, it’s important to learn all that you can about such options. That’s one more reason why it pays to become educated in the use of options.