Same-day sale
Also: same-day sale, exercise and sell, cashless same-day sale
An exercise-and-immediate-sale transaction for stock options, typically broker-assisted, where all shares are sold at exercise to produce cash and cover taxes.
A same-day sale exercises options and sells all resulting shares on the same trading day. It produces cash equal to the spread between exercise proceeds and the strike plus transaction costs. There is no capital gain or loss because the sale price equals the FMV at exercise. The full spread on NSOs is ordinary wage income, and for ISOs the sale triggers a disqualifying disposition, converting the spread to wages.
Example: 8,000 NSOs at a $5 strike exercised and sold same-day on a $72 stock. Gross proceeds of $576,000 minus the $40,000 strike equals $536,000 of ordinary wage income. The broker withholds 22% federal, state, and payroll taxes, and delivers roughly $330,000 cash after tax.
Common mistake: running a same-day sale on ISOs early in the year assuming AMT still applies. The disqualifying disposition eliminates AMT on that lot, which is often the goal, but it also forfeits any long-term capital gains treatment on future appreciation.
Same-day sale matters at IPO lockup expiration, at option expiration, during liquidity windows, and at any exercise where the employee does not want post-exercise market exposure.