What does NSO stand for?

Non-qualified stock option

NSO is a shortened form of the term non-qualified stock option. It’s a type of stock option where you’re required to pay ordinary income tax. This is a key point of difference from an ISO, or Incentive Stock Option.

What makes an NSO stand out is that it can be granted to anyone. You don’t need to hold a certain position or meet specific criteria. It’s a more open option, hence its name.

You might also come across NSO being referred to by other acronyms. These include NQO and NQSO. But all of these terms refer to the same thing – a non-qualified stock option.

Another name you’ll often hear for an NSO is a “non-statutory stock option”. So if you hear this term, know that it’s just another way of talking about an NSO.

Example for using ‘NSO’ in a conversation

Hey, did you hear about that NSO thing?

Yeah, it stands for Non-qualified Stock Option.

What does that mean, though?

It’s a type of stock option where you pay ordinary income tax, and it can be granted to anyone.