Case study: the 90-day scramble after leaving
An employee left with $90k of in-the-money ISOs and 90 days to find the cash, or lose them.
ISOs · Case studies
What happens to your ISOs the day you walk out the door? A 90-day clock starts, and if you do not exercise before it runs out, vested options you earned can simply vanish. Here is a composite of someone who got caught flat by that clock.
Names and numbers are a composite. The countdown is real, and it is brutal.
The setup
Lena left her job with a chunk of vested incentive stock options worth roughly $90,000 in the money, the gap between the current value and her strike price. She had assumed, like most people do, that vested options were hers to exercise whenever. They were, until her last day reset the rules.
Most plans give you a short post-termination window, statutory 90 days under the ISO rules, to exercise before vested ISOs either expire or convert to NSOs. After that window, the ISO tax treatment is gone.
The window is short and unforgiving
Ninety days is the statutory limit for keeping ISO treatment after you leave. Miss it and the options can expire worthless, no matter how deep in the money they were. See what happens to your ISOs when you leave.
The scramble
Lena now needed two piles of cash inside three months. First, the strike price to actually buy the shares. Second, the alternative minimum tax, because exercising and holding adds the bargain element to her AMT income, and her options were deep enough in the money that the spread was large.
The shares were in a private company. She could not sell any of them to raise the money. The cash had to come from somewhere else, fast.
She listed the real total cost, not just the strike
Strike price plus the AMT was the true number. People budget for the strike and forget the tax, then get blindsided. See the worst ISO trap, AMT on illiquid private stock.
She decided how many shares she could actually afford
Rather than chase the whole grant, she sized the exercise to the cash she could raise without wrecking her emergency fund. Partial exercise beats a forced all-or-nothing.
She checked whether the company offered any extension
Some companies extend the post-termination window or allow early-exercise arrangements. It is worth asking, because a longer window changes everything. Hers did not, so the 90 days stood.
She exercised what she could before the deadline
She bought the block she could fund and let the rest go. Losing some options hurt less than draining every account to keep all of them in an illiquid stock.
The post-termination window to keep ISO treatment is 90 days under the statute, though Lena should still check her own plan documents for its exact terms. The AMT she owed on the exercise depends on the bargain element against the AMT exemption and its phase-out. For 2026, the AMT exemption is $90,100 for single filers and $140,200 for married filing jointly 2026. That exemption starts to phase out once AMT income passes $500,000 single or $1,000,000 married filing jointly, and it is fully gone at $680,200 single or $1,280,400 married filing jointly 2026.
What went wrong, and what did not
Lena kept the most valuable options by acting fast. What she lost was avoidable, and the loss was about timing, not money.
How could she have avoided the scramble?
By treating the exercise decision as something to plan before quitting, not after. If she had modeled the strike-plus-AMT cost while still employed, she could have staged exercises over earlier years, lined up the cash, or decided in advance which options were worth keeping. The 90-day clock is only a crisis when it surprises you. See what happens to your ISOs when you leave.
What this means for you
Vested ISOs stop being patient the moment you leave. A short window starts, you owe the strike and often AMT to keep them, and private shares give you nothing to sell to cover it. Before you hand in notice, add up the strike plus the tax, decide which options are worth funding, and ask whether your company will extend the window. For the decision on private shares, read planning your ISO exercise year. If you are staring at a 90-day clock and a five-figure exercise cost, a fit check before the deadline is time well spent.
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