Exercise Window
The period of time during which a stock option holder is permitted to exercise their vested options, including both the active employment period and any post-termination exercise period.
What Is an Exercise Window?
An exercise window is the total period of time during which you are allowed to exercise your vested stock options. While you are employed, your exercise window is effectively open for all vested options — you can exercise at any time from the moment shares vest until the option's expiration date (typically 10 years from the grant date). The critical dimension of the exercise window, however, is what happens after you leave the company. Most stock option agreements give departing employees a limited post-termination exercise period — often just 90 days — to exercise their vested options or lose them entirely.
How the Exercise Window Works
During Employment
While actively employed, you can exercise any vested options at any time. If your plan allows early exercise, you can even exercise unvested options (subject to a repurchase right on the unvested portion). There is generally no urgency to exercise during employment beyond tax planning considerations, since you have until the option's expiration date.
The Standard 90-Day Window
The most common post-termination exercise window for ISOs is 90 days. This means if you leave the company — whether voluntarily or through a layoff — you have just three months to come up with the cash to exercise your vested options. After 90 days, unexercised options are forfeited permanently. This 90-day period is the single most common cause of employees losing their vested equity.
Why 90 Days Is the Default
The 90-day standard is driven by tax law, not generosity. Under IRS rules, if an ISO is exercised more than 90 days after termination, it automatically converts to a non-qualified stock option (NSO) and loses its favorable tax treatment. Most companies set the post-termination exercise window at 90 days to preserve ISO status for departing employees. However, nothing prevents a company from offering a longer window — the ISOs simply convert to NSOs after the 90-day mark.
Extended Exercise Windows
A growing number of companies, particularly those focused on employee-friendly practices, now offer extended post-termination exercise windows of one to ten years. Companies like Pinterest and Coinbase popularized longer windows. With an extended window, you have more time to decide whether to exercise, but any ISOs that are exercised more than 90 days after termination will be treated as NSOs for tax purposes.
Practical Implications for Startup Employees
The 90-Day Cash Crunch
The 90-day window creates an acute financial pressure point. When you leave a company, you may owe tens or hundreds of thousands of dollars to exercise your vested options — plus the associated tax bill (AMT for ISOs, ordinary income tax for NSOs). Coming up with this cash in 90 days, while also navigating a job transition, is one of the most stressful financial situations startup employees face.
Know Your Window Before You Leave
Before resigning, review your stock option agreement to understand your post-termination exercise window. If it is 90 days, plan your exercise strategy before you give notice. Consider exercising some or all of your vested options while still employed — this spreads the financial burden and gives you more time to plan.
Negotiating a Longer Window
If you are joining a company, try to negotiate an extended exercise window upfront. It is much easier to request this at the offer stage than after you have already joined. A 5- or 10-year post-termination window significantly reduces the risk of forfeiting vested equity due to a cash crunch.
Forfeiture Is Real
Industry data suggests that a significant percentage of startup employees forfeit vested stock options because they cannot afford to exercise within the post-termination window. This is not a theoretical risk — it happens frequently, especially at later-stage companies where the strike price is higher and the exercise cost is substantial.
How It Relates to Exercising Stock Options
Your exercise window defines the deadline for one of the most important financial decisions you will face as a startup employee. If you are planning to leave a company, understanding your window and having a financing plan in place is essential. Stock option financing — including non-recourse loans — exists specifically to help employees exercise within tight windows without risking personal savings. Never assume you can deal with the exercise decision later. Once the window closes, your vested options are gone.