How long do I have to exercise stock options after leaving?
Short answer: often 90 days, but the deadline that counts is the one in your grant agreement and equity plan. For ISOs there is a second clock: to keep ISO tax treatment, you generally have to exercise within 3 months after your employment ends (1 year if you leave because of a disability). This page is not tax advice, legal advice, or financial advice.
Why is 90 days the usual window?
The window after you leave is called the post-termination exercise period. Carta, which administers equity for many private companies, says most startups give 90 days, whether you quit or were let go. Vested options you do not exercise inside that window expire and go back to the company's option pool.
The 90 days traces back to a tax rule. Under the federal tax code, an incentive stock option keeps its ISO status only if you were an employee from the grant date until 3 months before you exercise. Companies that want their ISOs to stay ISOs tend to write a window of 3 months or less into the standard option agreement. Law firm Cooley describes this as the usual default in private-company option agreements.
Unvested options are a different question. They usually do not get a window at all. They typically cancel on your last day.
What happens to ISOs after 3 months?
The option does not have to die at 3 months. Some plans let you exercise later. But an ISO exercised more than 3 months after you leave is treated as a nonstatutory stock option (NSO) for tax purposes. IRS Publication 525 says so directly: if you do not meet the employment requirement, the option is a nonstatutory option.
That changes the tax on exercise. For most NSOs, the IRS says you include in income the fair market value of the stock you receive, minus what you paid, in the year you exercise. For an ISO that still qualifies, there is generally no regular income tax at exercise, but the IRS notes you may owe alternative minimum tax (AMT) in the exercise year.
Two exceptions to know about. If you leave because of a permanent and total disability, the 3-month period becomes 1 year under the tax code. If an option holder dies, a plan can give heirs a different exercise period. The plan document spells out both.
Can the window be longer than 90 days?
Yes. The contract window is set by the company's plan and your grant agreement, not by the tax code. Some companies extend it for everyone. Carta reports that Pinterest gives former employees up to seven years to exercise vested options, and that Carta's own window matches the time a person spent at the company.
Two limits still apply. A longer contract window does not keep ISO status past the 3-month tax clock. Options exercised after that are taxed as NSOs. And under the tax code, an ISO cannot be exercisable more than 10 years after its grant date.
A company can also extend the window for one person as part of a departure. Cooley notes that extending the window on an ISO you already hold counts as a modification that ends its ISO status. If the offer to extend stays open for more than 29 days, the option can lose ISO status even if you turn the offer down. If someone offers you an extension, get the tax effect in writing before you sign.
What should you check before your last day?
Read the grant agreement and the plan, not a summary. You are looking for five things:
- The exact number of days, or months, in your post-termination window
- Whether the window is different for ISOs and NSOs, or for disability, death, or retirement
- How many options are vested on your last day, and the strike price on each grant
- The current fair market value your company uses. At a private company this is often a 409A valuation.
- How you can pay to exercise: cash, or a cashless or sell-to-cover exercise where the plan and a public market allow it
Then do the cash math. Exercising takes the strike price times the shares. NSOs can add income tax on the spread. ISOs can add AMT. A 90-day clock can force that bill before any liquidity event. A CPA who has your grant paperwork is the right person to check the tax side.
FAQ
How long do I have to exercise stock options after I quit? Often 90 days from your last day, but your grant agreement sets the real deadline. Some companies give years. Vested options you do not exercise in time typically expire.
Do ISOs lose ISO status after 90 days? Under the tax code, an ISO keeps ISO treatment only if exercised within 3 months after employment ends (1 year for a disability). Exercised later, it is taxed as an NSO. Not tax advice.
What happens to unvested options when I leave? They typically cancel on your last day. The plan and your grant agreement govern any exceptions, such as acceleration.
Can I ask for a longer exercise window? You can ask. Some companies extend windows case by case. Extending an existing ISO can end its ISO status, so check the tax effect with a CPA first.
Where can you check this, and run your own dates?
Sources:
- IRS, Publication 525, Taxable and Nontaxable Income (statutory stock options and the 3-month employment rule)
- IRS, Topic no. 427, Stock options (NSO income at exercise, AMT on ISOs)
- U.S. Code, 26 U.S.C. § 422, Incentive stock options (3-month rule, 1-year disability rule, 10-year term)
- Carta, The post-termination exercise period explained
- Cooley GO, Extending post-termination option exercise periods
Related: What's the difference between ISOs and NSOs when you leave? and Should I leave before my vesting cliff?
If you want a private figure for your own grants and leave date, Worth Leaving runs the stay-vs-go math in your browser. After a verdict, Notify me proves your inbox and saves that run privately. Not a mailing list.