Employee stock options offer future rewards that may or may not materialize. They are frequently awarded by startups that have not yet gone public and seek to incentivize their staff to get the business off the ground.
There is no transfer of ownership with stock options. They are a right to purchase shares at a certain price at a specific time in the future. The difference between the option price and the actual market price benefits the employee.
The sale of shares following an initial public offering (IPO) is typically restricted by a market standoff clause, which prevents the selling of shares for a set length of time in order to keep the stock’s market price stable.