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I have unqualified employee stock options that vest at 20% per year, with a limit of 10 years. Some are vested now. I can "retire" from this company in 3 years to do other things, based on these options. My tax bracket is 31%. My company has had a +200% return the past 2 years and looks good for 2-3 more years.

My question: Should I exercise what is vested each year, buying back my company's stock, so that after 18 months, I will have lower capital gains? This would be a cashless transaction, exchanging stock options for stock. Or should I hold on and exercise when I leave, taking the hit then? Anytime I exercise, it'll put me in the 39% bracket, no matter what year.

My inclination is to hold and not give up any shares until I leave. My company has a good history of splits and growth.

Thanks for any ideas.
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