When Is the Best Time to Exercise Employee Stock Options?


Not sure when to exercise your Employee Stock Options? This guide will get you started.

Employee Stock Options (or ESOs) are a unique opportunity for an employee to build long-term wealth.

But ESOs’ value is more unpredictable than the worth of other investments like stocks of stock market, bonds, or mutual funds.

The following proven strategies will help you not only effectively manage your ESOs but also increase your gains from $40K per year to $80 per year or even more.

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When do you exercise your stock options?

The biggest value of a stock option is that it’s an option.

You decide if you want to exercise it and when you want to exercise it. No other investment is this flexible. But no other investment is this uncertain, either.

Do you know the saying “the bigger the risk the greater the reward”? It applies to stock options.

They can make you BIG MONEY. But they can also make you nothing.

So when do you exercise your ESOs? You have five options.

Option #1. You can’t exercise your ESOs yet

That’s right. Usually, until you work at your company for at least a year, you won’t be able to exercise stock options.

The typical vesting schedule gives you a chunk of options every year. Then it ends on a vesting period of 4 or 5 years. The number of years depends on your Employee Stock Options Plan. (So if you haven’t read it yet, go ahead and read it.)

Option #2. You exercise your ESOs and lose money

If the company’s stock price is lower than your ESOs strike price, then if you exercise your options, you’ll lose money. So once again, don’t exercise them yet.

For example, let’s say the company’s stock price is $25 per share. And let’s say your ESOs strike price is $50 share. So…

You’d exercise your option and buy a share at $50. But if you sell this share at the market price of $25, you’ll lose $25. See how this works?

Options #3. You exercise your ESOs and make money

It’s better to wait when your company’s stock price is much higher than your ESOs’ strike price. Whatever the difference is—it’s your profit.

For example, let’s say the company’s stock price is $50 per share. And let’s say your ESOs strike price is $25 share. So…

You’d exercise your option and buy a share at $25, then turn around and sell the share at the market price of $50. You’ll make $25. A nice 100% ROI!

Option #4. You exercise your ESOs and make BIG MONEY

Another option is to wait until your company’s stock is at its highest value. But how would you know that?

That’s what we do at GrowthAdvisor: we predict the value of your stock options up to 10 years into the future.

So either use our free and simple tool or read lots of books and publications to educate yourself on how to play this prediction game. Which is the most unpredictable gamble?

We know how hard it is. Because it took us years to develop a sophisticated algorithm that can extract accurate prediction data by analyzing over 800,000 companies’ growth patterns.

Anyway, back to the topic.

Option #5. You exercise your ESOs before they expire

With all this great talk about making BIG MONEY, let’s not forget about your ESOs’ expiration date.

As we mentioned above, your ESOs are options. The upside is, you can decide if and when to exercise them. The downside is, if you don’t exercise them by their expiration date, they’ll expire.

So make sure you know your expiration date. And make sure to exercise your ESOs before then.

Now, let’s talk about how to do it.

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How do you exercise employee stock options?

You’re ready to cash out. Congratulations!

Let’s say you have 1,000 options with the strike price of $25 and the market price of $50. Your potential profit can be $25,000 (1,000 times the $25 price difference).

There are three strategies to consider when exercising stock options.

Strategy #1. Exercise and hold

Pay $25,000 in cash for 1,000 shares, then hold them until the share market price goes up and you can make a bigger gain. Use GrowthAdvisor to predict the stock value.

This strategy is the riskiest and the most rewarding.

Strategy #2. Exercise and sell to cover

Pay $25,000 in cash for 1,000 shares, then sell only enough stock to cover your expense. So, in this example, you’d sell half the stock to make your $25,000 back. And you’d hold on to the rest.

This strategy is not as risky, but your reward isn’t as big as it could be—if you waited (provided you believe your company’s value will rise).

EDITOR’S NOTE: Most companies provide in-house services (or contracted services, like through Fidelity) that will take care of this strategy for you. Often they’ll also take out your taxes.

Strategy #3. Exercise and sell

Pay $25,000 in cash for 1,000 shares, then turn around and immediately sell them for $50,000. Make a profit of $25,000.

This strategy is the safest. But your reward is the smallest, too.

EDITOR’S NOTE: Want to know how your Employee Stock Options’ gains are taxed? Talk to your tax accountant. There are different types of stock options, and they’re all taxed differently.

How do you predict your stock options’ worth?

The best time to exercise employee stock options is when the stock is highest in price.

This is where GrowthAdvisor comes in.

We’re the world’s first stock-worth predicting platform. 


With our free tool, you could potentially DOUBLE and even TRIPLE your Employee Stock Options gains by predicting your company’s value up to 10 years into the future.

GrowthAdvisor studies the growth patterns of over 800,000 companies to predict your stock worth and then checks the market for the best jobs with the best stock grants.

GrowthAdvisor also gathers data on salaries, revenue, and equity trends and presents them to you in simple charts and graphs. That data adds up. And then it powers your personalized Wealth Guide.

GrowthAdvisor sends you emails to alert you to your stock value changes. How awesome is that? If you want to sell your stock, just log in to GrowthAdvisor and see how much you’ll make. Done!

Your decision is now informed by real data. So…

The benefits of using GrowthAdvisor are obvious.

Instead of going through the pain of all this complicated math and uncertainty, all you have to do is answer a few questions, and BOOM. You’re done. GrowthAdvisor will do the rest.

How do you make the most money from your stock options?

Now, let’s talk about your gains.

Let’s say you have timed your stock options exercising just right. Let’s say you made a huge profit. Following our previous examples, let’s say you made a whopping $100,000. Great!

Now what? What do you do with these proceeds? And is your stock options journey over?

The best way to go about your new cash is to invest it in the stock market. And the best way to go about making even more cash is to get more stock options to play the game again. You know how they say, “wash, rinse, repeat”? Exactly.


You already exercise all your stock options at your current job. All that’s left is your salary.

Don’t worry.

Simply log into GrowthAdvisor and look for the best companies that offer the highest stock option grants. Then compare your current job to the job at one of those companies. Does it make sense to make a move? Switch jobs? When?

GrowthAdvisor will give you the answer to both questions.

You’ll know if it’s smart to make a career move.

And you’ll know when to do it, to make the most money.

Final Thoughts

Employee Stock Options can make you a lot of money. But they’re complicated, volatile, and unpredictable in value. Plus, if your company doesn’t grow, they’ll be worthless.

GrowthAdvisor makes Employee Stock Options management easy, smart, and automated. We do the math for you, so you don’t have to.

Ready to give us a try? Get started here.

Questions? Email our team at support@growthadvisorhq.com

Article Number: GA-186
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