Statutory Stock Option

Statutory Stock Option

A Statutory stock option is also known as incentive stock options. This type of employee stock option gives participants an additional tax advantage that unqualified or non-statutory stock options do not. Statutory stock options require a plan document that clearly outlines how many options are to be given to which employees, and those employees must exercise their options within 10 years of receiving them. Furthermore, the option exercise price cannot be less than the market price of the stock at the time the option was granted. Statutory stock options cannot be sold until at least a year after the exercise date and two years after the date the option was granted. The taxation of statutory stock options can be somewhat complicated. Exercise of statutory stock options will not result in immediate declarable taxable income to the employee. Capital gains tax is then paid on the difference between the exercise and sale price. This type of option is also considered one of the preference items for the alternative minimum tax.

Single Stock Future - SSF

Single Stock Future - SSF

A futures contract with an underlying of one particular stock, usually in batches of 100. No transmission of share rights or dividends occur. Behaving exactly like a futures contract, an SSFs give investors increased capabilities to leverage themselves within the market. Additionally, these products, unlike most options, can be traded on margin.