Should you exercise your stock options early if your company allows it?


I'm a developer at a "startup" with a company size of over 50. While I am great at coding, matters like stock options and equity aren't my cup of tea.

Is there any benefit to exercising the incentive stock options early? What are some cons if I don't exercise them?

Stock Options

asked May 29 '14 at 16:30
Emerson Thompson
9 points

1 Answer


Pros - become a stockholder, so you will have voting rights, dividend rights (although dividends are unlikely in a startup), etc.

Cons - if you exercise, and company tanks, you lose any exercise price that you paid (this assumes no cashless exercise).

More often than not, holders of stock options do no exercise until there is an exit transaction happening or on the horizon. The stock in a private company is not liquid so you can't really turn the stock into cash (i.e., realize the value of the stock) until an exit transaction.

answered Aug 25 '14 at 20:57
David Wittmann
161 points

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Stock Options