How to exercise your stock options

"Exercise stock options" transcript

Schwab brand music plays.

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Charles Schwab

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Maybe you'd like to exercise your stock options—or maybe you’re just thinking about it.

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How to exercise your stock options.

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Here's how to do it online when the time comes.

First, you might want to get a handle on what you have.

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A sample Equity Awards account on Schwab.com appears. 

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Once you've logged in to your account and clicked on the Equity Awards tab, you can use our award calculators to model different outcomes before you pull any triggers. 

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Screen zooms in closer. "Equity Awards" from the navigation menu is highlighted. Then "Award Calculators" is highlighted.

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If you just want to look over your options, select the Stock Options link under Equity Today. 

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"Stock Options" is highlighted under the Exercisable Awards section.

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Remember—you may have both vested and unvested options.

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Screen switches to reveal a sample of specific Stock Options in the account.

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You can find details related to your stock option grant here. 

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An arrow is highlighted and selected. Details of a sample Stock Option are revealed, including Award ID and Vesting Schedule.

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Click the gray "Exercise" button in the upper-right corner of the screen.

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Screen scrolls to the right and the "Exercise" button in the top right of the screen is highlighted.

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To place your order, first choose the stock symbol for the options you wish to exercise.

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The word "Trade" from the navigation menu is selected. The screen switches to the Trade screen.

The word "All-in-One" from the navigation menu is highlighted and the account selected is "Equity Award Center." The screen zooms in under the first step titled "1. Enter Order" and highlights the first field that information is needed. It is labeled "Symbol." A sample symbol is selected. 

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Next, choose your strategy. In this case, you'll want Exercise Options. 

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The next menu item labeled "Strategy" with a drop-down menu is highlighted. The selection "Exercise Options" from that drop-down menu is selected.

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Then select the exercise type. 

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The next menu item labeled "Exercise Type" with a drop-down menu is highlighted. 

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You can choose from Sell, Hold, or Sell & Hold if you want to do a combination of the two. 

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The drop-down menu under “Exercise Type” reveals three choices: Sell, Hold, and Sell & Hold.

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The choice you make needs to match what you want to have happen. For example, if you want to keep—or hold onto—your shares, you'll choose Hold.

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The word "Hold" is highlighted in the drop-down menu. The screen then zooms out and sample "Non-Qualified Stock Options" award details populate onscreen.

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Now enter the number of options you want to exercise.

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The number "10" is entered into the "Shares to Sell" field for one of the sample awards.

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You can exercise options from multiple awards at the same time.

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The list of sample awards are individually highlighted.

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There are some important things to keep in mind here:  

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An alert notification appears that says “Exercising your stock options can have tax implications.”

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First, exercising your stock options can have tax implications—so we always encourage you to consult with your tax advisor.

Second, always be sure you're following your company's policy for placing transactions, including open trading windows and blackout periods.

Now that that's covered, let's move on.

You can choose to place a market order or a limit order. 

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Screen zooms in to bottom-left corner. The drop-down menu under the title "Order Type" is highlighted.

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Here's what that means: A market order will execute at the price of the stock when the order is received.

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The category "Market" is highlighted from the drop-down menu.

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A limit order specifies the minimum price the stock will be sold for. The stock price has to meet that price for your order to be executed.

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The category "Limit Order" is highlighted from the drop-down menu.

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If you're placing a limit order, select the timing of your order—Day Only or Good Until Canceled.

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The "Limit Price" field is filled in with the sample number "$10.00." Then the "Timing" field is highlighted. "Day Only" and "Good Until Canceled" are highlighted from the drop-down menu.

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Good Until Canceled orders remain in the system for 60 calendar days. After 60 days, if the order hasn't executed, it expires. It's up to you to cancel the order if your company trading window closes during this time, so keep an eye on it.

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An alert notification appears that says "It is your responsibility to cancel the order if your company trading window closes."

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Once you've entered all the details for your exercise, click the green "Review Order" button.

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The "Review Order" button is highlighted.

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Now, you'll verify your order. Confirm the instructions you entered, review order messages, and make any changes you need. 

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The second step titled "2. Verify Order" under "All-in-One" from the navigation menu is highlighted. 

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To edit your order, click the "Change" button. 

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The screen scrolls down and the "Change" button is highlighted.

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If everything looks good, click the "Place Order" button.

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The "Place Order" button is highlighted.

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You'll get a confirmation number when your order has been placed. 

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The third step titled "3. Order Received" under "All-in-One" from the navigation menu is highlighted. The screen changes to reveal a confirmation of the sample trade order that was placed.

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To check the progress of your order, select the "Order Status" screen.

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The "Order Status" button is highlighted.

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Your order will appear here. If the order has filled, it will say "Closed – Awaiting Settlement."

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The screen changes to reveal information under the "All Orders" tab of "Equity Award Center." The sample trade order that was placed in the previous screen appears here and is labeled "OPEN."

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Otherwise, it will show "Open" until it fills.

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The word "OPEN" is highlighted.

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And that's how you exercise your stock options.

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Happy exercising.
For assistance call 1-800-654-2593.

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We're betting you have plans for this money. If you have any questions about how to make those plans happen, give us a call. It's what we're here for. 

Schwab brand audio clip plays.

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Charles Schwab
Own your tomorrow.

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BROKERAGE PRODUCTS: NOT FDIC-INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.
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CC2738579 (0719-97RF) (09/19)