Stock options are how cash-starved tech, and life sciences companies large and small can most easily recruit and retain talent. Stock options are also an excellent tool for bigtech and bigpharma companies to align the optionee’s interest with the business.

Even if you are excited to start a new chapter of your career, leaving a job is stressful for anyone. Before you pack up your things and send your goodbye emails, make sure not to forget about your stock options.

A stock option provides you the opportunity to buy a stock share in the future at a set price. So, when you decide you're ready to buy the stock using an option, you exercise the option. When you exercise your option, you pay the cash price in the option contract. In some cases, you can "net exercise" the stock options, with the number of shares corresponding to the value of the exercise price for all the shares deducted from the number of shares issued. If the cost of exercising your option is below the stock's market value and there is a liquid public trading market, this can be very lucrative. If you exercise and sell, you will need to budget for the exercise price and the ensuing taxes due on the gain (which will be ordinary income unless you exercise and hold for at least one year). Options that qualify for ISO treatment will be taxed differently than options that are "non-qualified."

If you have stock options with the company you are leaving, you should quickly act (or not act) with your eyes wide open....

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