Should I early exercise unvested ISOs when the FMV is above the strike price?
In the question you cited, I assumed immediate exercise, that is why you understood that I was talking about 30 days after grant. I actually mentioned that assumption in the answer. Sec. 83(b) doesn't apply to options, because options are not assets per se. It only applies to restricted stocks. So the 30 days start counting from the time you get the restricted stock, which is when you early-exercise. As to the AMT, the ISO spread will be considered AMT income in the year of the exercise, if you file the 83(b). For NQSO it is ordinary income. That's the whole point of the election. You can find more detailed explanation on this website.
"There are a few other items that you should be aware of when getting options: The strike price is usually determined by an independent valuation of the common shares (called a 409a valuation). This should give you a sense on what the options are worth. Obviously you are hoping that the value becomes many multiple of that. There are two kinds in the US: Non-quals (NQO) and Incentive Stock Options (ISOs).  The big difference is that when you exercise Non-quals, you have to pay the tax on the difference between the ""fair"" market value on the shares and what you paid for them (the strike price).  This is important because if the company is private, you likely can not sell any shares until it is public. With ISOs, you don't pay any tax (except AMT tax) on the gain until you actually sell the shares.  You should know what kind your getting. Some plans allow for early exercise, essentially allowing you to buy the shares early (and given back if you leave before they vest) which helps you establish capital gains treatment earlier as well as avoid AMT if you have ISOs. This is really complicated direction and you would want to talk to a tax professional.  And always a good idea to know how many total shares outstanding in the Company. Very few people ask this question but it is helpful for you to understand the overall value of the options." I'm a bit out of my element here, but my guess is the right way to think about this is: knowing what you do now about the underlying company (NZT), pretend they  had never offered ADR shares.  Would you buy their foreign listed shares today? Another way of looking at it would be: would you know how to sell the foreign-listed shares today if you had to do so in an emergency?   If not, I'd also push gently in the direction of selling sooner than later. An option gives you the option rather than the obligation to buy (or sell) the underlying so you don't have to exercise you can just let the option expire (so long it doesn't have an automatic expiry). After expiration the option is worthless if it is out of the money but other than that has no hangover. Option prices normally drop as the time value of the option decays. An option has two values associated with it; time value and exercise value. Far out of the money (when the price of the underlying is far from the strike price on the losing side) options only have time value whereas deep in the money options (as yours seems to be) has some time value as well as the intrinsic value of the right to buy (sell) at a low (high) price and then sell (buy) the underlying.  The time value of the option comes from the possibility that the price of the underlying will move (further) in your favour and make you more money at expiry. As expiry closes it is less likely that there will be a favourable mood so this value declines which can cause prices to move sharply after a period of little to no revaluing. Up to now what I have said applies to both OTC and traded options but exchange traded options have another level of complexity in their trading; because there are fewer traders in the options market the size of trade at which you can move the market is much lower. On the equities markets you may need to trade millions of shares to have be substantial enough to significantly move a price, on the options markets it could be thousands or even hundreds. If these are European style options (which sounds likely) and a single trading entity was holding a large number of the exchange traded options and now thinks that the price will move significantly against them before expiry their sell trade will move the market lower in spite of the options being in the money. Their trade is based on their supposition that by the time they can exercise the option the price will be below the strike and they will lose money. They have cashed out at a price that suited them and limited what they will lose if they are right about the underlying. If I am not correct in my excise style assumption (European) I may need more details on the trade as it seems like you should just exercise now and take the profit if it is that far into the money. "What could the tax issues with the IRS be? I thought (but not totally certain) that the tax treatment of an ISO option was based on difference between exercise price and FMV at the time of the sale.  This is an accounting issue. There were times not so long ago that companies actually did these things on purpose, to boost the stock grant values for their employees (especially senior employees). They would give a grant but date it with an earlier date with a more favorable valuation. This is called ""backdating"", and it brought companies down and CEOs into criminal courts. In addition, only reasonable compensation is allowed as a deduction for the company, and incorrectly set strike price may be deemed unreasonable. Thus, the deduction the company would take for your compensation can be denied, leading to loss of tax benefit (this was also a weapon used by the IRS at the time against companies doing backdating). Last but not least, company that has intentions of going public cannot allow itself such a blatant disregard of the accounting rules. Even if the mistake was not made on purpose (as it sounds), it is a mistake that has to be corrected. What should I take into consideration to determine whether a 27% increase in shares is a fair exchange for an increase in 270% increase in strike price. Did you know the strike price when you signed the contract? Was it a consideration for you? For most people, the strike price is determined at the board approval, since the valuations are not public and are not disclosed before you actually join, which is already after you've agreed to the terms. So basically, you agreed to get 100 sheets of toilet paper, and instead getting 127 sheets. So you're getting 27 sheets more than you initially agreed to. Why are you complaining? In other words, options are essentially random numbers which are quite useless. By the time you get to exercise them, they'll be diluted through a bunch of additional financing rounds, and their value will be determined for real only after the IPO, or at least when your company's stocks are trading OTC with some reasonable volume. Until then - it's just a number with not much of a meaning. The FMV does matter for early exercise and 83(b) election, if that is an option, but even then - I doubt you can actually negotiate anything." If you're talking about ADBE options, that is an American style option, which can be exercised at any time before expiration. You can exercise your options by calling your broker and instructing them to exercise. Your broker will charge you a nominal fee to do so. As an aside, you probably don't want to exercise the option right now. It still has a lot of time value left, which you'll lose if you exercise. Just sell the option if you don't think ADBE will keep going up. The CBOE had a great article on this. I will search for it and edit. The normal dividends are not adjusted. Which is why you see early exercise of just out of the money options sometimes. To get that dividend. A special dividend, say a $50 stock with $1/yr dividend but now has a $3 one time dividend would likely result in an option strike adjustment. OK, my fault for not doing more research. Wikipedia explains this well: http://en.wikipedia.org/wiki/Option_style#Difference_in_value Basically, there are some cases where it's advantageous to exercise an American option early.  For non-gold currency options, this is only when the carrying cost (interest rate differential aka swap rate or rollover rate) is high. The slight probability that this may occur makes an American option worth slightly more. You said the decision will be made by EOD. If you've made the decision prior to the market close, I'd execute on the closing price.  If you are trading stocks with any decent volume, I'd not worry about the liquidity.  If your strategy's profits are so small that your gains are significantly impacted by say, the bid/ask spread (a penny or less for liquid stocks) I'd rethink the approach. You'll find the difference between the market open and prior night close is far greater than the normal bid/ask. "What you are proposing is called a ""covered call"" strategy.  It is a perfectly reasonable speculative play on how far the stock will move within a certain amount of time.  If your belief that the stock's volatility is such that it is unlikely to reach the strike price before the maturity is greater than the markets (which it seems it is), then go ahead and sell the call." with the semi-strong form of the Efficient Market Hypothesis expected dividends are priced into the options and security already. If you are able to locate such an arbitrage opportunity then you should take it, but I suspect it will be more more difficult than you think. Remember that many dividends require you to have been a shareholder by a certain date prior to the dividend occurring. The only time I've bothered with stop orders is when I think the position is in a particularly volatile state and there is an earnings report pending.  In this situation it's an easily debatable thing to do.  If I'm so concerned that the earnings report will be enough to cause a wild downswing that I'd place a stop order, maybe I should just drop the position now.   I subscribe to the school of thought that you don't sell your MVPs.  I've bought a few things on a whim that really performed well over the few years to follow.  To me it doesn't make sense to pick a return at which I would turn off the spigot.  So generally it doesn't make sense to hold orders that would force a sale, either after some upside or downside occurs. Additionally, if I've chosen something as a long term hold.  I never spend all my cash opening up a position.  I've frequently opened positions that subsequently experienced a decline, when that happens I buy more. Meaningless side thought: With the election coming I've been seriously considering pulling some of my gains off the table.  My big apprehension with doing that is that I have no near-term alternative use for the money.  So what's the point of selling a position I'm otherwise comfortable with just to pay taxes on the gain then probably buy back in? As far as I know, the AMT implications are the same for a privately held company as for one that is publicly traded.  When I was given my ISO package, it came with a big package of articles on AMT to encourage me to exercise as close to the strike price as possible.  Remember that the further the actual price at the time of purchase is from the strike price, the more the likely liability for AMT.  That is an argument for buying early.  Your company should have a common metric for determining the price of the stock that is vetted by outside sources and stable from year to year that is used in a similar way to the publicly traded value when determining AMT liability. During acquisitions stock options often, from what I know of my industry, at least, become options in the new company's stock.  This won't always happen, but its possible that your options will simply translate.  This can be valuable, because the price of stock during acquisition may triple or quadruple (unless the acquisition is helping out a very troubled company). As long as you are confident that the company will one day be acquired rather than fold and you are able to hold the stock until that one day comes, or you'll be able to sell it back at a likely gain, other than tying up the money I don't see much of a downside to investing now. In the first case, if you wish to own the stock, you just exercise the option, and buy it for the strike price. Else, you can sell the option just before expiration, it will be priced very close to its in-the-money value. One reason this happens is due to dividends. If the dividend amount is greater than the time value left on a call, it can make sense to exercise early to collect the dividend.  Deep in the money puts also may get exercised early. There's usually little premium on a deep in the money put and the spread on the bid-ask might erase what little premium there is. If you have stock worth $5,000 but own puts on them that will give you $50,000 upon exercise (and no spread to worry about), the interest you can gain on the $50k might be more than the little to no time value left on the position... even at several weeks to expiration. According to your post, you bought seven shares of VBR at $119.28 each on August 23rd.  You paid €711,35.  Now, on August 25th, VBR is worth $120.83.  So you have  But you want to know what you have in EUR, not USD.  So if I ask Google how much $845.81 is in EUR, it says €708,89.  That's even lower than what you're seeing.   It looks like USD has fallen in value relative to EUR.  So while the stock price has increased in dollar terms, it has fallen in euro terms.  As a result, the value that you would get in euros if you sold the stock has fallen from the price that you paid.   Another way of thinking about this is that your price per share was €101,72 and is now €101,33.  That's actually a small drop.   When you buy and sell in a different currency that you don't actually want, you add the currency risk to your normal risk.  Maybe that's what you want to do.  Or maybe you would be better off sticking to euro-denominated investments.   Usually you'd do dollar-denominated investments if some of your spending was in dollars.  Then if the dollar goes up relative to the euro, your investment goes up with it.  So you can cash out and make your purchases in dollars without adding extra money.   If you make all your purchases in euros, I would normally recommend that you stick to euro-denominated investments.  The underlying asset might be in the US, but your fund could still be in Europe and list in euros.   That's not to say that you can't buy dollar-denominated investments with euros.  Clearly you can.  It's just that it adds currency risk to the other risks of the investment.  Unless you deliberately want to bet that USD will rise relative to EUR, you might not want to do that.   Note that USD may rise over the weekend and put you back in the black.  For that matter, even if USD continues to fall relative to the EUR, the security might rise more than that.  I have no opinion on the value of VBR.  I don't actually know what that is, as it doesn't matter for the points I was making.  I'm not saying to sell it immediately.  I'm saying that you might prefer euro-denominated investments when you buy in the future.  Again, unless you are taking this particular risk deliberately.