I have some employee stock options that I have held for 8 months. They are in the money, but I am unsure if I should exercise them now or wait.
The stock price has been steadily increasing, but I am concerned it might drop soon. I want to take advantage of the gains, but also fear exercising too early.
What factors should I think about to time this properly?
Eight months is still pretty short for stock options. It comes down to your taxes, how the company’s doing, and whether you need cash now.
Exercise now and you’ll pay ordinary income tax on the difference between your strike price and current value. Wait longer and you might get capital gains rates, which are way better. Plus, do you actually want to hold the stock long-term or just cash out?
Timing depends on your specific terms and expiration date. Don’t let FOMO make this decision for you - stick to a plan that fits your financial goals.
Most people exercise too early because they panic about paper profits. Focus on how your company’s actually performing, not daily price swings.
Stock options burned me hard three years back. I exercised everything at once without considering taxes.
Lost almost 40% to ordinary income rates because I got greedy. Now I exercise in smaller chunks to spread the tax hit.
Check your vesting schedule and how the company’s doing first. Market timing usually doesn’t work out like you think.
8 months feels long but options usually need more time to really pay off.
I stopped trying to time things perfectly and just set target gains instead. Hit 50% or 100%? Exercise some regardless of where I think the stock’s headed next.
Also figure out if you actually want to hold the stock long-term or just take the money and run. Changes everything.
Focus on your tax situation and company performance, not just stock price.
Track these key things:
• When your options vest
• Strike price vs current stock price
• Company earnings reports
• Expiration dates
• How it’ll hit your taxes
Make decisions based on company fundamentals, not just because the stock’s running up.