The main objective of this paper is to discuss thr general use of stock option contracts in risk management of companies. This is done by reviewing the literature on how options influence executives' risk talking and conducting a case study of starbucks Corporation.
In the first, theoretical, part of the paper the literature concerning the general use of stock options, how they work and how they impact risk and risk management is reviewed. In the second part the application of the stock options at Starbucks Corporation is assessed using the information provided by the company in its annual reports.