What Happens to Your Stock Options When You Leave a Company

You got a job offer at a startup. You signed the paperwork. There were stock options — a number that sounded big, terms that sounded complicated, and a vague sense that this might matter someday.

Now you're leaving.

What actually happens to those options?

The answer depends on three things: your option type, your exercise window, and whether your options are vested. Here's how each one works.

First: Only vested options are yours

When you leave, unvested options are forfeited. No negotiation, no prorated share, no credit for the work you did toward them. Unvested is gone.

The math on this is simple: if you have a 4-year vest with a 1-year cliff and you leave after 18 months, you've vested 25% of your grant (the cliff, at month 12) plus another 6 months of monthly vesting — roughly 37.5% of the total.

The remaining 62.5%? Returned to the option pool. You never see it.

What to do before you leave: Check your current vesting status in your cap table platform (Carta, Pulley, or your company's equity portal). Know your exact vested count before you hand in your notice.

The exercise window: the clock starts when you leave

Here's the part that catches most people off guard.

When you leave a company, a clock starts. You typically have 90 days to exercise your vested options — meaning you have to decide whether to actually buy the shares. If you don't exercise within that window, you lose the options.

Forever.

This is called the post-termination exercise window (PTEW), and 90 days is the most common default. Some companies are more generous — 1 year, 2 years, or even 10 years — but 90 days is the baseline your offer letter probably has.

Why 90 days is brutal

Options have a cost. To exercise, you have to pay the strike price (also called the exercise price) per share. If you have 10,000 vested ISOs with a $1.50 strike price, exercising means writing a check for $15,000 — plus potentially triggering AMT taxes on top of that.

If you can't or don't want to spend that money within 90 days, you lose options you spent years earning.

What to do before you leave

Check your offer letter or stock option agreement for the post-termination exercise period. If it's 90 days and you have meaningful vested options, you need to make a decision about exercising before or right after your departure.

Some companies negotiate extended exercise windows, especially for long-tenured employees or those with significant equity stakes. It never hurts to ask.

ISO vs. NSO: the type changes what happens next

The two most common option types for startup employees — ISOs (Incentive Stock Options) and NSOs (Non-Qualified Stock Options) — are treated very differently when you leave.

If you have ISOs

ISOs have a unique rule: if you don't exercise within 90 days of leaving, they automatically convert to NSOs. At that point, you've lost the favorable ISO tax treatment — even if you eventually exercise and the company exits well.

For ISOs, the 90-day window is a hard line. Miss it, and your tax situation changes significantly.

If you have NSOs

NSOs don't have the same 90-day conversion risk, but their tax treatment is worse from the start. When you exercise NSOs, the spread (current fair market value minus strike price) is treated as ordinary income and taxed accordingly — even if you can't sell the shares yet.

Most employees have ISOs. Check your option agreements to confirm.

What "leaving" means: resignation vs. termination

The trigger for your exercise window is separation from the company, regardless of how it happens.

• You quit: 90-day clock starts
• Laid off: 90-day clock starts
• Fired for cause: Some companies have provisions that allow immediate forfeiture, even for vested options. This is uncommon but worth checking your agreement

Important exception: If the company is acquired while you're still employed, that's a different scenario with different rules (often an acceleration clause). But if you leave before an acquisition closes, you're back to the standard exercise window rules.

The decision: should you exercise?

When you leave and the clock is running, you have to decide: exercise or walk away.

This is never a simple math problem. It depends on:

• The 409A valuation — what the company says your shares are worth for tax purposes
• The strike price — what you'd pay per share
• How much cash you're willing to put at risk — exercising means money out of pocket with no guarantee of return
• Your read on the company's exit potential — is this thing going anywhere?
• The tax implications — ISOs trigger potential AMT; NSOs trigger income tax at exercise

For a $0.50 strike price with a $5 409A valuation and a company you believe in? Exercise might be a strong move. For a $3.00 strike price with a $3.50 409A and a company you left because the trajectory looked rough? Walking away might be the right call.

This is the decision most people make badly — either they exercise everything reflexively, or they let the clock run out and lose options they should have kept.

Early exercise and 83(b) elections (if applicable)

If you exercised options early (before they vested) and filed an 83(b) election, leaving the company has different implications. The shares you early-exercised are typically already yours (subject to a company repurchase right that may or may not apply depending on your agreement).

If you did not file an 83(b) after early exercise, leaving before full vesting can create a tax event as unvested shares are "forfeited" — consult a tax advisor in this case.

The bottom line

When you leave a startup:

1. Unvested options are gone. Accept it and move on.
2. Vested options stay yours — temporarily. You have a window (usually 90 days) to exercise.
3. ISOs expire or convert if you miss the window. It's a hard deadline.
4. Exercising costs money. Know your strike price, the 409A valuation, and your tax situation before you decide.
5. Some companies negotiate extended windows. Ask, especially if you have meaningful equity.

The mistake most people make is treating options as an afterthought when they leave. A 90-day window sounds like a lot of time. It isn't, especially when you're starting a new job, moving cities, or managing any of the other things that happen when you change jobs.

Check the dates. Do the math. Make a deliberate decision.

Equity Decoder covers the full decision framework for exercising options when you leave, including how to calculate your realistic tax bill, how to evaluate whether the company is worth the risk, and what to actually say when you ask your company for an extended exercise window.