How to read your stock option agreement

Your option paperwork is where the real terms live — and most people never read past the number of shares. Here are the ten things to find, what each one means for you, and the clauses worth a second look before you make any decision.

The ten things to find

What to find	Why it matters
Number of options & vesting schedule	How many you earn, and when (cliff + monthly).
Strike / exercise price	What you pay per share to turn an option into stock.
Option type (ISO or NSO)	Drives the tax treatment entirely.
Expiration date	Options are worthless after it — usually 10 years from grant.
Post-termination exercise window	How long you have to exercise after leaving (often ~90 days).
Early-exercise / 83(b) provision	Whether you can exercise before vesting, and the filing it triggers.
ROFR & transfer restrictions	Whether — and how — you can ever sell.
Acceleration (single/double trigger)	What happens to unvested options in an acquisition.
Repurchase rights	Whether the company can buy your shares back, and at what price.
Governing plan document	The master rules your grant sits under — read it too.

The three clauses people miss

The post-termination window. Leave, and a short clock (often ~90 days) starts to exercise or lose vested options. Check it before you resign — it forces a fast, costly decision.
Transfer restrictions & ROFR. These decide whether a sale is even possible and who gets first dibs. No amount of buyer interest overrides them.
Repurchase / clawback rights. Some plans let the company buy back vested shares on departure, sometimes at cost. This can quietly cap your upside.

Turn the clauses into your numbers

Once you've found the strike, type and share count, the next question is what it costs and what it's worth. The free exercise & AMT calculator turns the strike and FMV into a real cost; the valuation guide turns the share count into a range.

Frequently asked questions

What's the most important clause in a stock option agreement?

For most people it's the combination of strike price, option type (ISO/NSO) and the post-termination exercise window — those three decide the cost, the tax, and how long you have to act if you leave. The transfer/ROFR clause matters most if you ever want to sell.

How do I know if my options are ISOs or NSOs?

The agreement states it explicitly, usually near the top or in the plan document. ISOs are only for employees and have special (sometimes AMT-triggering) tax treatment; NSOs can go to contractors and advisers and are taxed as ordinary income on exercise. If it's unclear, ask HR for the grant notice and plan.

Can my company take my vested shares back?

Sometimes — if the plan includes a repurchase or clawback right. Vested shares are usually yours, but some agreements allow a buyback on departure, occasionally at the price you paid. Find the repurchase clause and read it carefully before leaving.

Get the numbers before you decide

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