When Do Stock Options Expire?

Most employee stock options expire on one of two timelines, depending on your employment status.

10 years from the grant date is the standard expiration for employees who remain at the company. This is the maximum allowed under IRS rules for ISOs, and most companies apply the same limit to NSOs.

90 days after you leave is the window most employees face if they quit, are laid off, or are terminated. For ISOs, the 90-day deadline is set by the IRS, miss it and your ISOs either expire or convert to NSOs, which carry less favorable tax treatment. For NSOs, the post-departure window is set by the company and can range from 30 days to several years, though 90 days is the most common default.

Some companies, particularly later-stage startups, offer extended post-termination exercise windows of one, five, or even ten years. These are worth asking about before you leave. Check your stock option agreement or your equity portal (Carta, Shareworks, etc.) for your exact expiration date.

For a deeper look at how vesting and expiration interact, see our guide to stock option vesting schedules.

What Happens When Stock Options Expire In the Money?

Your options are "in the money" when the company's current fair market value (FMV) is higher than your strike price, meaning you could buy shares at a discount to what they're worth today.

If those options expire without being exercised, you lose that right permanently. The spread between your strike price and the FMV, which represents your potential gain, disappears entirely. There is no grace period, no recovery, and no appeal.

A concrete example: Say you have 10,000 vested options with a $2.00 strike price, and the company's current FMV is $15.00. The spread is $13.00 per option, na total of $130,000 in potential value. If those options expire unexercised, that $130,000 is gone.

The most common reason employees let in-the-money options expire is the 90-day post-termination window. Employees leave their company, underestimate the deadline, can't cover the exercise cost plus tax bill, or simply don't realize the options have real value. All of these are avoidable with the right information and planning.

What about out-of-the-money options? If your FMV is below your strike price at expiration, your options are "underwater" and have no exercise value. Letting them expire costs you nothing financially, you simply lose the right to buy shares at a price that was never advantageous to begin with.

What to Do Before Your Stock Options Expire

If you have a deadline approaching, whether it's the 10-year grant expiration or a 90-day post-departure window, here's what to do:

1. Find your expiration date. Log into your equity portal or review your stock option agreement. If you've already left your company, the clock is running.
2. Check if your options are in the money. Compare your strike price to the company's most recent 409A valuation (your FMV). If FMV is higher than your strike price, your options have real value worth protecting.
3. Calculate the total cost to exercise. Multiply your strike price by the number of vested options. Then factor in taxes, ISOs may trigger Alternative Minimum Tax (AMT), and NSOs trigger ordinary income tax on the spread at exercise. Use our AMT calculator to estimate your ISO exposure.
4. Evaluate how you'll fund the exercise. You can pay out of pocket, or work with a third party like ESO Fund that provides non-recourse funding to cover both the exercise cost and taxes, with no repayment owed if the company doesn't reach a successful exit.
5. Don't wait until the last few days. If you're in your post-departure window, confirm your expiration date now and make the exercise decision with time to spare, not under pressure with 48 hours left on the clock.

For more on the exercise decision itself, see our guide on when to exercise your stock options.

How Does Stock Option Expiration Affect Taxes?

Letting options expire, whether in the money or out, has no tax consequence on its own. You only owe taxes when you exercise, not when options lapse.

The tax exposure comes at exercise:

• ISOs: Exercising doesn't trigger ordinary income tax, but the spread between your strike price and FMV may be subject to AMT. If you hold the resulting shares long enough, you may qualify for long-term capital gains rates on the eventual sale. One important rule: if you don't exercise ISOs within 90 days of leaving your company, they convert to NSOs and lose their favorable tax treatment entirely.
• NSOs: The spread at exercise is taxed as ordinary income in the year you exercise, regardless of whether you've sold the shares.

Early exercise, exercising while still employed, before a significant FMV increase, combined with an 83(b) election can be a tax-efficient strategy for employees at early-stage companies where the FMV is still low.

For a full breakdown of how options are taxed at every stage, see our stock option taxes guide.

Don't Let Your Options Expire Unexercised

If your options are in the money and the deadline is approaching, the worst outcome is doing nothing. Employees lose real money every year simply by missing a date they didn't know to track. Log into your equity portal, find your expiration date, and make a deliberate decision, even if that decision is to let underwater options lapse.

If the math works but the cost is the obstacle, ESO Fund covers 100% of the exercise cost and taxes with no out-of-pocket risk. If the company doesn't exit successfully, you owe us nothing. Get started here.

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Written by Jordan Long, Marketing Lead at ESO Fund