Legal Definitions - stock-option contract

A stock-option contract is a type of contract that allows an individual to buy or sell a certain amount of stock at a specific price within a certain time frame. A contract is an agreement between two or more parties that creates obligations that are enforceable by law.

For example, if John wants to buy 100 shares of XYZ company at $50 per share within the next six months, he can enter into a stock-option contract with the seller. The contract will specify the terms of the agreement, including the price, the number of shares, and the expiration date.

The stock-option contract is a legal document that serves as evidence of the agreement between the parties. It outlines the rights and obligations of each party and provides a remedy in case of a breach of contract.

Overall, a stock-option contract is a useful tool for investors who want to buy or sell stock at a specific price within a certain time frame. It provides a legal framework for the transaction and protects the rights of both parties involved.