Employees who are leaving, or have just left, a company — trying to figure out how long they have to exercise their vested options before losing them.
You Left the Company — How Long Do You Have to Exercise?
ISOs and NSOs run on different clocks the moment your employment ends. Here's what each one means for you.
Understand exactly what deadline applies to your specific grant before it expires.
The day your employment ends, a countdown starts on your vested options — and which type you hold changes how long that countdown actually is.
The 90-Day Rule That Only Applies to ISOs
To keep favorable ISO tax treatment, you generally must exercise within 90 days of your last day of employment. Miss that window and your ISOs automatically convert to NSOs for tax purposes — you keep the option, but lose the preferential treatment.
Why NSOs Give You More Room to Decide
NSOs don't carry the 90-day statutory deadline. Your post-termination exercise window is whatever your specific option plan and grant agreement say — commonly anywhere from 90 days to several years, so check your plan document rather than assuming.
- Read your specific plan document — "standard" post-termination windows vary widely by company
- The 90-day ISO deadline is a tax rule, not a company policy you can negotiate away
- Missing the deadline doesn't cancel the option — it just changes how it's taxed
Frequently Asked Questions
What happens if I don't exercise my ISOs within 90 days of leaving?
Your options don't disappear, but they lose ISO tax treatment and are taxed as NSOs going forward. You'll owe ordinary income tax on the exercise spread instead of potentially qualifying for capital gains treatment.
- The 90-day clock starts on your official termination date
- Missing it converts the tax treatment, not the ownership
- Talk to a tax advisor before the deadline, not after
Do NSOs expire faster or slower than ISOs after I leave?
It depends entirely on your grant agreement, not a universal rule. Some companies extend NSO windows to a year or more post-termination; others mirror the 90-day ISO standard. Always check your specific plan document.
- Request your plan document before your last day, not after
- Extended windows are a negotiable point in some exit conversations
- NSOs exercised after leaving still trigger ordinary income tax at that time
The Lovie Advantage
Founders who set up equity through Internal Link: Lovie Cap Table Management define post-termination exercise windows clearly in the plan from day one, so departing employees aren't left guessing what deadline applies to their specific grant.
If the departure is because of an acquisition rather than a resignation, the rules shift again — see Internal Link: What Happens to Your Options in an Acquisition or IPO. For the statutory ISO deadline itself, IRS Tax Topic 427 on the treatment of stock options is the primary source.
Check Your Exercise Window
Understand exactly what deadline applies to your specific grant before it expires. Start Free with Lovie