Do you know how to take full advantage of your company’s non-qualified stock options? How do you factor this financial asset into your financial portfolio? From understanding exactly what non-qualified stock options are to knowing what it takes to put yourself in the best position to succeed - this is the episode you don’t want to miss. What about dealing with the tax implications, I’ve got you covered on that front too! Get your financial information from a source that has your best interests at heart. Make sure you have pen and paper handy - you’ll want to take good notes so you can reference this critical information down the road! 

You will want to hear this episode if you are interested in...

• What a non-qualified stock option is and how it works. [1:15] 
• How your non-qualified stock option is taxed. [3:30] 
• Breaking down an example of how to utilize non-qualified stock options. [5:00]
• Three strategies you can use to exercise your options. [9:45]
• Helpful questions to ask yourself. [12:30]

What are non-qualified stock options? 

Have you ever worked for a company that offered non-qualified stock options (NSO)? How do the options work? If you’ve got the option for NSO at work, you might want to know what those options are. An NSO is a type of employee stock option where you pay ordinary income tax on the difference between the grant price and the price at which you exercise the option. It is important to note that non-qualified stock options require payment of income tax of the grant price minus the price of the exercised option. NSOs might be provided as an alternative form of compensation. In most cases, the prices are often similar to the market value of the shares. Now that you understand what non-qualified stock options are, the important part comes next, how can you use those options? 

Three strategies you can use 

To make the most of your company's non-qualified stock options, I’ve got three strategies for you to consider. If you don’t have a place to start when it comes to using your stock options, let this be a starting place for you! 

• Exercise your NSO and sell it immediately with your own cash or through a brokerage.
• Exercise your NSO and hold on to the stock options. 
• Wait toward the very end of when the NSOs are set to expire, exercise, and then sell. 

There is however an additional way to have your NSOs taxed and rather than waiting to exercise them - you can use an 83b election. The 83(b) election is a provision under the Internal Revenue Code (IRC) that gives an employee the option to pay taxes on the total fair market value of the restricted stock at the time of granting. To learn more about NSO and so much more, make sure to tune in to this informative episode!

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