Much has been written recently about Silicon Valley employees who have worked for years at early stage companies, helping the companies to become very valuable, and as a result building significant value in the employees’ stock options. Yet, those employees are sometimes unable to exercise the options when they leave the company, because they cannot afford the required cash outlay.

There are two reasons for the cash outlay required by employees. One is that the option itself must be exercised, so the employee must pay his or her employer the exercise price for the shares being purchased. Although this amount could be significant, the option exercise price is often relatively low for many early employees at a company, so the total amount required to exercise the option may be manageable.