For stock options, "vested" doesn't mean you own anything. It means you have the right to buy at your strike price. Skip the exercise step and that right expires — first when you leave the company, then again at the 10-year mark. Here's the full sequence, with the traps at each step.
For stock options. RSUs collapse stages 2 and 3 — see below.
Day one. The company promises you a number of options at a specific strike price, on a specific vesting schedule. You don't own anything yet. You can't exercise. You can't sell.
You've earned the right to buy. As each tranche vests, those options move from "unvested" to "vested" in your equity portal. You can now exercise them — but you still have to do it actively. Nothing happens automatically.
You write the check (or do a cashless exercise), pay the strike price for each share, and the company issues the shares. Now you own actual stock. You can sell it (subject to any holding periods, lockups, or trading windows).
The language is the problem. "Vested" sounds like a finished state — like the equity has landed and the transaction is done. For RSUs that's roughly true: vesting and ownership happen together. For stock options it isn't. Vesting is the middle step, not the last one.
The gap shows up most painfully when people leave a company. They think: "I had 5,000 vested options, that's mine." Then their last day comes, the 90-day exercise window starts ticking, and they realize they need to either come up with the cash to exercise (plus tax) or watch the options disappear. Treating vested options like a balance you can withdraw misses the actual mechanics by one critical step.
RSUs (restricted stock units) work differently. The vest event delivers shares directly to your account — no exercise step, no strike price, no separate decision. Tax is withheld at vesting based on the fair market value of the shares received.
| Stock options (ISO / NSO) | RSUs | |
|---|---|---|
| At vesting | Right to buy at strike price | Shares delivered to you |
| Cost to receive shares | Strike price × number of shares | None (taxes withheld instead) |
| Tax at vesting | None for ISOs (AMT may apply at exercise); NSOs taxed on bargain element at exercise | Ordinary income on FMV of vested shares |
| Action required? | Yes — you must exercise | No — automatic |
| Can the value expire? | Yes — 90 days post-termination, 10 years from grant | No — once vested, you own the shares |
If your grant is RSUs, the distinction between "vested" and "owned" practically doesn't matter — they happen at the same moment. If your grant is options, the distinction is the whole game.
Each vest event on your schedule moves a small slice from the unvested column to the vested column. See how a 4-year vesting schedule works for the standard cadence, or calculate your vested shares as of today.
The whole point of separating "vested" from "exercised" is that there's a decision in the middle. Vesting is the company's move. Exercising is yours. Without a reminder, that decision rarely happens — the new tranche shows up in your portal and just sits there.
See the full workflow on stock options vesting reminders, and when you're ready to think about the exercise side, the stock options exercise cluster covers timing, taxes, and the deadlines that matter after vesting.
Set a reminder for your next vest date so the decision doesn't get skipped.
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No. Vested means you have the right to buy your shares at the strike price. Exercised means you actually bought them. For options, those are two separate events. You can have fully vested options that you never exercised — and if you let them expire, they disappear.
Vested shares (or vested options) are ones you've earned and can act on. Unvested shares are still tied to the company's vesting schedule — if you leave, you forfeit them. The line between the two moves with each vest event on your schedule.
For stock options: no. Vesting gives you the right to buy at your strike price; you still have to write the check (or do a cashless exercise) and pay any tax due. For RSUs: yes, vesting and ownership happen together — the shares land in your account on the vest date.
You keep the right to exercise them, but only for a limited window — typically 90 days from your last day. If you don't exercise inside that window, the vested options are forfeited. The "I have vested equity" thought doesn't survive past the 90-day mark unless you act.
Sometimes. Exercising early starts the long-term capital gains clock and locks in your strike price. But it also means paying cash up front and potentially triggering AMT for ISOs. The right answer depends on the company, your tax bracket, and your cash position. See /stock-options-exercise/when-to-exercise-stock-options/ for the full decision framework.
For RSUs: usually yes, once they hit your account (subject to trading windows if your company has them). For stock options: no — you have to exercise first, then hold or sell. There's also a 1-year holding period after exercise to qualify for long-term capital gains treatment.
Because the gap between them is where most equity gets quietly lost. People hear "vested" and assume the value is locked in. It isn't — for options, you still owe the strike price and a possible tax bill, and you have a deadline to do it. Treating vested options like a checking account balance is a costly mistake.
Set a reminder for each vest date. Free, no account. You'll get an email before each tranche vests — enough time to actually decide what to do.
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