We investigate the optical properties of hydrogenated α-Sn nanocrystals up to diameters of 3.6 nm in the framework of an ab initio pseudopotential method including spin-orbit interaction (SOI) and the repeated supercell approximation. The fundamental absorption and emission edges are determined including quasiparticle effects and electron-hole interaction. The atomic geometries in the ground and excited electronic states follow from total energy optimization. We discuss the oscillator strengths of the optical absorption near the fundamental gaps for the most important transitions. We demonstrate that the spectra can only be correctly described including SOI. The strongly size-dependent Stokes shifts between optical absorption and emission are shown to be mainly a consequence of the different atomic geometries.