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Best Time To Exercise Stock Options?

When should you exercise a stock option? Assuming you stay employed at the company, you can exercise your options at any point in time upon vesting until the expiry date — typically, this will span up to 10 years.

Is it better to exercise options early? Early exercise makes sense when an option is close to its strike price and close to expiration. Employees of startups and companies can also choose to exercise their options early to avoid the alternative minimum tax (AMT).

Should I exercise my stock options as soon as they vest? Early exercise is the right to exercise your stock options before they vest. Your option grant should say whether you can early exercise. Early exercising could benefit you in a few ways: If you have ISOs, early exercising could help you qualify for their favorable tax treatment.