What is post-termination option exercise window?

After you leave a company, you have a fixed amount of time to exercise your options. That time is called the “exercise window”. It can vary from 30 days to 10 years. After the exercise window closes, the options expire, and the company can reissue them to new employees.

What is an option exercise window?

An exercise window on an option grant means that when you leave the company, you have a set period of time in which to exercise the options and purchase the underlying shares. If you don’t, you lose the options completely.

How long do you have to exercise stock options after termination?

When you leave, your stock options will often expire within 90 days of leaving the company. If you don’t exercise your options, you could lose them.

Should I exercise my options after leaving?

How long do I have to exercise my stock options? If you leave your company, you can only exercise before your company’s post-termination exercise (PTE) period ends. After that, you can no longer exercise your options—they’ll go back into your company’s option pool.

What does it mean to exercise 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.

What is exercise period stock options?

The exercise window (or exercise period) is the period during which a person can buy shares at the strike price. Options are only exercisable for a fixed period of time, until they expire, typically seven to ten years as long as the person is working for the company.

What is option lapse?

If the employee or grantee does not exercise the stock option within the specified time, the options lapse. 1 In other words, the granted shares of stock are forfeited by the employee and return to the grantor or employer.

Why would you lapse an option?

When you’re given stock options, you must exercise your options during a certain time frame. If you fail to exercise your option to purchase the stock during that time, your options will lapse. At this point, those shares of stock will no longer be reserved for you to buy at a predetermined price.

Do vested stock options expire?

The post-termination exercise period is the period after the end of your service with your employer during which an option must be exercised before it expires. Often, vested stock options permanently expire if they are not exercised within the specified timeframe after your termination of service.

What happens to vested stock when terminated?

In general, you have rights only to stock options that have already vested by your termination date. If the options have a graded vesting schedule, you are allowed to exercise the vested portion of the option grant, but most commonly you forfeit the remainder. You leave the company two and a half years after grant.

Should I exercise vested options?

Your stock options give you the right to exercise if and when you want to, but you’re never obligated to do so. If you choose to exercise your stock options, you can hold on to your company shares or sell them.

What are early exercise options?

Early exercise is the process of buying or selling shares under the terms of an options contract before the expiration date of that option. Early exercise is only possible with American-style options. Early exercise makes sense when an option is close to its strike price and close to expiration.