The 90-Day Exercise Window: What Leaving Really Costs
The most expensive clause in most option plans is one sentence long. The post-termination exercise period gives a departing employee a fixed window — conventionally ninety days — to pay for every option they spent years vesting. Miss it and the shares are gone, regardless of how much of the grant had vested or how well the company subsequently does.
How long do I have to exercise my options after leaving?
Usually ninety days, unless your plan says otherwise. Vested options that go unexercised inside that window expire and return to the pool. Some companies now offer an extended period, but that is a plan-level choice rather than a default anyone is entitled to.
- The standard post-termination window is ninety days from your last day.
- Incentive stock options lose their status three months after leaving, becoming non-qualified.
- An extended window keeps the option alive but does not remove the cost of exercising.
Why ninety days is harder than it sounds
A grant of 40,000 options at a $2 strike costs $80,000 to exercise in full, due inside three months, in cash, on shares that cannot be sold. For most people that is not a decision about conviction; it is a decision about liquidity. The window is also when the tax treatment shifts: incentive stock options not exercised within three months of leaving stop being incentive stock options and are taxed as non-qualified ones.
Both halves of that are quantifiable before the clock starts. The vesting schedule simulator shows exactly how many options are vested at a given departure date, and the ISO vs NSO tax calculator shows what exercising them costs under each treatment.
If you are writing the plan rather than reading it
An extended window — five or ten years for vested options — is increasingly offered and costs the company little beyond a longer-lived overhang on the cap table. It does change the instrument: extend beyond three months and the options become non-qualified by operation of the rules. Lovie keeps each grant's vested balance and window visible to the person holding it, which is a cheaper form of goodwill than most retention spend.
The tax treatment of exercising after leaving is summarised in IRS Topic 427 on stock options.