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Fair enough, but you could not have known that your options would not go underwater either. At the end of the day, options let you become an investor on the cheap. Hindsight is 20-20. I think the only nice way to do it is a long window for exercising options. Lets you benefit from your hours and also protects you from the risk if it goes south.

Yeah, I get that and realized I could have easily lost money too. It's not that it was painful to me when the company sold, though it did bug me then too, but at the moment of my exit interview and I was given the reminder that I could purchase within 90 days. It was in that moment that I really didn't like that my invested time had no value. Granted, it wasn't the first time in my life I realized this, it's just that I had never invested so much before.

I get your point but I think a clarification is useful here: the risk for gp was not "options might get underwater" but rather "stock is too illiquid".

Options are underwater if the strike price is less than the current market price; shares in private companies might not have an actual market price but you can estimate them. Underwater options still have >0 value since there's a non-zero chance the stock price will decrease before the expiration date -- of course, if the expiration date is close by and the strike price is much higher than the current price, the option value might be very close to 0. Still, you practically never exercise underwater options (there are some rare exceptions not very relevant here).

In grandparent's case, the issue is not underwater options; they are about to exercise the options and get stock. At the time they left the company, the stock price was presumably way above the ~$1 strike price. They could have bought (say) $60k worth of stock for only $30k, making a profit on paper. The problem is, as the article says, you have to pay taxes on capital gains AND that stock is illiquid (you can't easily sell it if at all).

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