Rethinking Whether to Exercise and Hold Non-Qualified Stock Options for Long-Term Capital Gains

When it comes to evaluating strategies to exercise your Non-Qualified Stock Options (NQSOs), what is your best plan of attack? Do you: Exercise and sell all your NQSOs immediately, cashing out the full proceeds? Exercise your NQSOs and hold shares of stock, hoping the stock price will go up? Or, leave your NQSOs unexercised and hope the stock price will go up? If you anticipate a higher stock price in the future...

Non-qualified stock options and incentive stock options are the two types of employee stock options that you may receive as part of your compensation package. While they have some similarities, they also differ, particularly when speaking to how they may be taxed at exercise and upon the final sale of stock.

Some employers may allow you to choose how you receive your equity compensation. They may allow you to receive it all in NQSOs or all in RSUs or they may allow you to...

Employee stock options are a powerful tool for businesses to provide an incentive for key employees and those who contribute to a company’s success. Stock options give you the right to purchase shares of stock at a predetermined price within a certain period of time through a vehicle called a stock option grant.     If the stock price increases above the exercise price of the employee stock options, the price you can buy your shares,...

If you have non-qualified stock options, you’ve likely spent time researching when and how you’ll face taxes for them. As a general rule, you will be subject to ordinary income tax on the profit you make when you exercise non-qualified options. Being taxed when you exercise non-qualified stock options, or NQSOs, is attractive for a few reasons. For one, you control when your options become taxable. You may also enjoy more clarity as to what...

Non-qualified stock options (NSOs) are a common compensation feature provided to employees as part of a compensation package. If you have access to these perks, they give you the opportunity to potentially profit from the rising value of the company’s stock. If you find yourself on the receiving end of NSOs, you need to understand what non-qualified stock options are and how they work, including how they could impact your income taxes, investment risk, and...