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How To Exercise Employee Stock Options?

When should you exercise employee stock options? 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.

What happens when an employee exercises a stock option? Exercising a stock option means purchasing the shares of stock per the stock option agreement. The benefit of the option to the option holder comes when the grant price is lower than the market value of the stock at the time the option is exercised.

How can I exercise my ESOP? At this time the employee can exercise them or put simply – buy them. The employee is allowed some time period during which this option to buy can be exercised. Once the employee decides to buy, these stock options are allotted to him at an exercise price which is usually lower than the FMV of the stock.

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How To Exercise Employee Stock Options

Exercise your stock options to buy shares of your company stock, then sell just enough of the company shares (at the same time) to cover the stock option cost, taxes, and brokerage commissions and fees. The proceeds you receive from an exercise-and-sell-to-cover transaction will be shares of stock.