Stock Option Exercise Strategy Advisor

Current Value: 37,500 vested shares × ($8.50 - $1.20) spread = $273,750 paper gain. ISO Tax Treatment: No ordinary income tax at exercise (unlike NSOs). BUT — the $273,750 spread IS an AMT preference item. At $155K income + $273,750 ISO spread, you likely trigger significant AMT liability. Estimate: AMT exposure ~$55,000–$75,000. Do NOT exercise all vested shares in one year. Staged Exercise Plan: Year 1 (now): Exercise 8,000–10,000 shares. Model your specific AMT threshold. Year 2: Exercise another tranche after confirming AMT calculation with CPA. Pre-IPO: Accelerate if company offers secondary or tender offer. Concentration Risk: At current FMV, 37,500 shares = $318,750. If your net worth is under $600K, these options represent significant concentration. Diversify immediately post-IPO lock-up expiration.