Vesting Period

• You might not be able to sell all the stock options you own, even if you have a paper profit. Employee stock options typically go through a vesting period, and you cannot sell your options until they are fully vested. In some cases the company uses an annual vesting period, requiring you to hold the shares for at least a year before exercising your options. The statement you receive should detail which options are exercisable and which ones are not yet vested.
  
  

Strike Price

• It only makes sense to sell your stock options if the current price of the shares is above the strike price of those options. For instance, if you hold 100 options with a strike price of $25 and the stock is selling for $40, you would make a nice profit if you sold. But if you have those same options and the stock price is $20, you would not realize a gain at all. When you hold employee stock options, it is important to keep a close eye on the stock price of your company.
  
  

Future Growth Prospects

• The decision to sell your stock options or hang onto them hinges in large part on your outlook for the company. As an employee, you have a better vantage point than most for assessing the performance of management, the profitability of the company and its future prospects for growth. If you think the short-term prospects are limited, selling the options and booking your profits makes sense. But if you think the company is doing very well and will continue to do so, it might make sense to hold out and wait for a higher stock price.
  
  

Tax Considerations

• You will have to pay taxes on the proceeds if you sell your employee stock options, so it is a good idea to run the numbers and see what your tax liability will be before you move forward. You can use a tax preparation software program to estimate your income for the year, then add the proceeds from your options sale to see what that does to your taxable income and your tax liability. Factoring in the taxes will make it easier to decide whether you should sell those options or hold them in hopes of a bigger profit.