Exercise window
Post-termination exercise window · PTE window · PTEPAn exercise window is the period in which a stock option can be exercised before it expires. After an employee leaves, the post-termination exercise window is the time left to exercise vested options, set by the plan; an option not exercised by the last day of the window is gone.
What is a post-termination exercise window?
An option grant carries two clocks. One is its own term; an ISO's can't run past ten years from the grant date. The other starts the day employment ends: the plan gives the departing holder a fixed period to exercise whatever has vested, and the plan decides what happens to unvested options.
The tax code sets its own limit beside the plan's. It counts an option as an ISO only if the holder was an employee until three months before the exercise date, so an ISO exercised more than three months after leaving is taxed as an NSO whatever the plan's window says. The three-month period is a year when the holder left because of disability.
The window is a plan term. Its length and any extension come from the grant agreement and the plan document.
How a post-termination exercise window works, with numbers
An employee leaves on June 30 with 1,000 vested options at a $2.00 strike under a plan with a 90-day window. The window runs to September 28. Exercising all of them costs $2,000, due by that date.
The statutory ISO cut-off, three months from June 30, is September 30. The plan's 90 days sit inside it, so an exercise on any day of the window keeps ISO treatment.
- Last day of employment
- June 30
- Window under the plan
- + 90 days
- Window closes
- September 28
- Cost to exercise 1,000 at $2.00
- $2,000
Why a post-termination exercise window matters
The window turns a grant that vested over years into a decision with a date. The cash to exercise is the strike times the vested shares, owed inside the window, and on an ISO the spread at that day's FMV lands in the AMT calculation the same year; on an NSO it is ordinary income.
Two dates can disagree. A grant's original expiration is years out; a termination replaces it with one a few months out. A record that still shows the original date overstates what is left.
Exercise window in Taiga Finance
In Taiga Finance an option grant's record carries an “Exercise window ends” date, the last day an exercise is possible, and a “Termination” status of active, terminated or cancelled with its date. A grant past its window shows an “Expired” tag and its log-exercise button is gone; a terminated grant shows “Terminated” and the date.
The date is the one entered on the grant record. It appears in the equity page's “Coming up” list as “Window closes”, with the company, the shares and the cost to exercise them, ranked by date across every company. An exercise logged after leaving can be marked “Treated as” “NSO” on an ISO grant.
Equity compensation →Key takeaways: Exercise window
- A post-termination exercise window is the time after leaving a company to exercise vested options.
- Vested options lapse when the window closes; the plan decides what happens to unvested ones.
- An ISO exercised more than three months after leaving is taxed as an NSO.
- The length is set by the plan and the grant agreement, and the window ends on a date.
Questions about Exercise window
What is a post-termination exercise window?
The period an option plan allows a departing employee to exercise vested options after their last day. Options not exercised by the end of it expire.
How long do I have to exercise after leaving a company?
Whatever the plan and grant agreement say. The grant agreement gives the length, the termination date fixes the end, and the tax code's three-month rule decides whether an ISO exercise inside it keeps ISO treatment.
How does the exercise window relate to the three-month ISO rule?
The tax code treats an option as an ISO only if the holder was an employee until three months before the exercise. A window that ends inside three months keeps every exercise in it under that rule; an ISO exercise later than three months after leaving is taxed as an NSO, whatever the plan's window.
Does Taiga Finance track when my options expire?
It shows the date the holder records as “Exercise window ends” on the grant, lists it under “Coming up” as “Window closes” with the shares and the cost to exercise, and marks the grant expired past it.