Your goals: What do you want the proceeds from the eventual sale of stock to pay for? Specifying a use for the profits (if any) will help you integrate the options into your life plan. Set a timetable: Options have an expiry date, so make sure you are aware of when they vest and when you wish to exercise them. Accurately value your options: Take into account both the exercise price and tax before you exercise and sell. If you choose to exercise before the initial public offering (IPO), you must ascertain the market price on the date of exercise for tax purposes. This can be difficult as there is no listing price for the shares. Think long-term: If your company is looking good for the long-run, then wait as long as possible before exercising or, alternatively, buy stock and sell after a long period. Historically, stocks increase in value over time so the exercise price is likely to be considerably lower than the market value after IPO. Think short-term: Internet start-ups are particularly volatile at the moment, so your biggest profit may come from short-term ownership. Leaving the company: Read the option plan and grant agreement to find out whether you can keep the options after leaving. Tax: Many people forget that they have to pay tax on their stock option gains. In Hong Kong you pay standard income-tax rates on the difference between the strike price and the market price on the date the options are exercised. This becomes particularly troublesome should you choose to exercise prior to the IPO, as no listing price will actually exist. Vesting rules and dividends: Work out how your shares vest - whether in instalments or all at once. Also note that upon exercise you now own shares in the company and you will receive dividends. Advice: Financial advisers can always help you work out the best way of utilising your options. IPO: As the IPO approaches, stock prices tend to rise, leading to a corresponding rise in the strike price of options. Try and get your stock options granted to you well before the IPO date as you will receive a much lower exercise price. Graphic: tenglo Graphic: TEN01gwz