Non-Qualified Stock Option

A Non-Qualified Stock Option (NSO) is a stock option that does not qualify for ISO tax treatment and is generally taxed as ordinary income on the spread between exercise price and fair market value at exercise (subject to jurisdiction-specific rules). In equity compensation, a Non-Qualified Stock Option (NSO) is commonly granted to employees, advisors, and non-employee directors and offers more flexibility than ISOs in terms of eligibility and limits.