Exercise window
Also: exercise window, option exercise window, exercise period
The time period during which a vested option can be exercised. Standard employment exercise windows run 10 years from grant, compressed to 90 days after termination unless the plan extends it.
The exercise window is the period within which an option must be exercised or lost. ISOs carry a statutory maximum 10-year term. NSOs have no statutory cap but typically match the 10-year convention. The dominant practical constraint is the post-termination exercise period: the default 90 days after leaving employment, during which the holder must pay the strike and, for NSOs, the withholding on the spread.
Example: a senior engineer leaves a private company with 15,000 vested ISOs at a $4 strike, FMV of $18 at departure. She has 90 days to exercise. The exercise costs $60,000 cash plus an AMT liability on the $210,000 spread. If she does not have $60,000 plus the AMT cash, she forfeits the options.
Common mistake: ignoring the 90-day clock during a resignation. Many employees start a new role, set a calendar reminder for month three, and discover the options expired on day 90, not day 91. Some companies now offer extended windows of five or ten years, but the default remains 90 days.
Exercise windows matter at departure, at contemplation of leaving, and any time a severance is negotiated.