alphafighter: 2. Given that the stock price of the company would have to come down quite a bit before the options would not be profitable, is it worth the risk to excercise and hold onto the shares for a year to get the long term capital gain rate on whatever appreciation in the stock price occurs during that year......

As you've already heard, you are asking investment advice here, and you more than any of us know the outlook for the company in question. So you need to assess that aspect, which is not insignificant. From a pure "stock option strategy" point of view, the general wisdom is that you are wise to let options sit and grow in value for most of their lifespan. I.e., in your case, wait another four years or so. The idea being that, rather than tie up your capital in these stocks, since you are guaranteed the right to purchase them any time over the next five years, and purchase them at a GREAT price, do other things now to grow that capital. Let the market grow the value of these options.

Now, obviously, that can be risky, but that's where your knowledge of the company in question enters in,helping you determine if the risk is worth taking.

mathetes