Reload Option

Definition of 'Reload Option'


A type of employee compensation in which additional stock options are granted upon the exercise of the previously granted options. Reload options are features which, rather than pay the employee in cash, upon being exercised, the employee is compensated in shares. The exercise price of the newly granted option is set to the market price of the shares on the date the reload option is granted.

Investopedia explains 'Reload Option'


A reload option is a stock-for-stock option. For example, an employee who is granted a reload stock option with a term of 10 years but who exercises the option after six years may be granted a reload option for shares with a term of four years. The new grant is for the same number of years as the underlying option. Rather than having to come up with the money required to pay for the shares of the underlying option, the employee is given a new option which intrinsically has value.

For example a CEO, Dave, holds a reload option. Each option is to purchase 1,000 shares at $25 each. If the stock price goes up to $40, Dave could exercise by delivering 625 shares and receiving 375 shares (this is the stock-for-stock option). Dave would receive a new option to purchase 625 shares for $40 (this is the reload). Essentially, Dave will still gain or lose on 1,000 shares.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Cash and Carry Transaction

    A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.
  2. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  3. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  4. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  6. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
Trading Center