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 they types of options you are being offered. This article covers 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).
It’s important to understand the tax implications of NSOs and other considerations when deciding whether and when to exercise your options. Here or some additional things to consider when adding NSOs to your financial plan.
Don’t let the clock run out on your options
Obviously, you want to exercise your stock option when the stock is “in the money”, meaning its current value is above the grant price. For example, if you are issued options with a grant price of $50, and you exercise your option when market price $100, you realize an immediate gain. That’s the beauty of stock options.
But this is a timing game, if you are waiting for the market price to max-out, you risk...
Risk Management and Insurance
