If you've been offered stock options as part of your compensation package, you probably have a lot of questions about if, when and how to exercise them. Stock options can be a powerful investment tool because they allow you to purchase stock in your company at a discounted rate.

Many companies include stock options in employee compensation packages, and if you’ve been offered stock options as part of a compensation package, it’s important to understand the types of options you are being offered. We'll cover some key mistakes to avoid when exercising non-qualified stock options (NSOs), termed “non-qualified” because they do not meet all of the IRS requirements to be deemed incentive stock options (ISOs).