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Tax implications of exercising stock options
Exercise and hold stock options...
Exercising a stock option means purchasing the issuer’s common stock at the price set by the option (grant price), regardless of the stock’s price at the time you exercise the option.
See About Stock Options for more information.
Tip: Exercising your stock options is a sophisticated and sometimes complicated transaction. The tax implications can vary widely – be sure to consult a tax advisor before you exercise your stock options.
Choices When Exercising Stock Options
Usually, you have several choices when you exercise your vested stock options:
Hold Your Stock Options
If you believe the stock price will rise over time, you can take advantage of the long-term nature of the option and wait to exercise them until the market price of the issuer stock exceeds your grant price and you feel that you are ready to exercise your stock options.
Just remember that stock options will expire after a period of time. Stock options have no value after they expire.
The advantages of this approach are:
- you’ll delay any tax impact until you exercise your stock options
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