If you are ever exercising your options; get out the crowbar, pry open your wallet, and go find an accountant to explain all of your tax options and the risks involved in them.<p>If you exercise your options, I believe you generate a taxable event. If you do not sell the stock for twelve months (as advocated in the article), you risk the stock price dropping below your strike price and you might not have enough money left to pay your tax bill. I recall reading a sob story (Money magazine?) about a guy going bankrupt because of this but I haven't been able to find it.