How can you early exercise your options? Can your strike price change over your 4 years?

Question

I’ve always heard it’s a good idea to early exercise your options. Is there a way that you can do that, do you just pay for all your options up front to the company? And what’s the main benefit? Am I always going to be able to purchase my options at the same price as I best over the course of 4 years. Or will it be subject to change and get higher as I near my 3rd and 4th years.

6ym891ukphg5xkq · Accepted Answer

Your strike price doesn't change, but your tax implications can depending on if you exercise earlier or later. It is a good idea to early exercise so you're eligible to treat your ISOs as long term capital gains. You'd have to ask your company to know if early exercise is possible, not every company supports it from what I've heard. Highly recommend this article to look through some of the benefits and tradeoffs / tax implications of exercising at different points: https://manual.withcompound.com/manual-company-equity/understanding-startup-offers

How can you early exercise your options? Can your strike price change over your 4 years?

About

Tech

Members