Expiration Date (for options)

A stock option’s expiration date is the last day you can exercise your right to buy the underlying shares. Think of it as a deadline. After this date, the options become worthless, and you can no longer purchase the company stock at the agreed-upon price. It’s crucial to understand your expiration date to avoid losing the potential value of your stock options.

What happens if I don’t exercise my options before the expiration date?

Your options expire and become worthless. You lose the opportunity to buy the shares at the exercise price. It’s like a coupon expiring before you can use it.

How do I find my expiration date?

Your stock option grant agreement outlines all the details of your options, including the expiration date. It’s usually clearly stated. You can also typically find this information in any equity management platform your company uses or by contacting your company’s HR or legal department.

What are common expiration timelines?

Expiration dates vary, but 10 years from the grant date is common for Incentive Stock Options (ISOs) and Non-Qualified Stock Options (NSOs). Shorter expiration periods, such as 90 days post-termination, are also common, especially for NSOs. It’s important to know your specific expiration date.

What if I leave my company?

Your expiration date may change if you leave your company. Often, you’ll have a shorter timeframe to exercise your vested options after your departure, sometimes as short as 90 days. This timeframe is often outlined in your company’s stock option plan or your individual grant agreement. Check these documents carefully or consult with your company’s HR department to confirm the exact post-termination exercise period.

Can the expiration date be extended?

In rare cases, a company may extend the expiration date of stock options. However, this isn’t typical and generally requires board approval. Don’t count on an extension; plan to exercise your options well in advance of the expiration date.

What factors should I consider when deciding when to exercise?

Several factors influence the optimal time to exercise, including:

• Current market value of the shares: Is the current value significantly higher than your exercise price?
• Your personal financial situation: Can you afford the exercise costs and potential taxes?
• Your company’s prospects: Do you believe the share price will continue to rise?
• Tax implications: Understand the tax consequences of exercising ISOs versus NSOs. Learn More: Understanding Your Stock Options ISO vs NSO
• The time remaining until expiration: Leaving enough time avoids a rushed decision.

It’s common to be unsure about the best time to exercise. Earlyasset can help you understand your options and explore potential liquidity strategies. Learn More: Selling Your Shares with Earlyasset The Process

So here’s what we covered:

• What an option expiration date is and why it matters.
• Where to find your expiration date.
• What happens if you don’t exercise before expiration.
• How leaving your company can affect the expiration date.
• Factors to consider when deciding when to exercise.