Do I have to exercise my non-qualified stock options right away?
January 29, 2007
Date: Thu, 16 Nov 2006
Hello Michael: I found your name and other information on the internet. Very good info… I have a question:
My wife received a NQSO for 600 shares at $29, with an expiration date of 12/6/2015, and they are becoming exercisable on 12/6/2006, 2007 and 2008, at 200 shares per year. The stock price is now $31.
Does this mean I have to buy 200 shares by 12/6/2006, and for which the option price is $29 X -200 = $5,800, resulting in $400 of ordinary income on which income and social security taxes must be paid?
Date: Wed, 22 Nov 2006
The consequences of an exercise is correct. However, you don’t have to exercise the option during 2006. It doesn’t expire until 12/6/2015, so the last day you can exercise this option is 12/5/2015.