10 things to watch out for when you're Exercising share options

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.