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by Undo Capital
December 15, 2025
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What Is Option Exercise?

Option exercise is the process by which a person uses their share option to purchase company shares at the pre-agreed exercise price.

Option Exercise Meaning

The option exercise meaning centres on converting potential equity into real ownership. To define option exercise in practice, once options have vested and any exercise conditions are met, the holder pays the exercise (strike) price and receives actual shares in the company. A clear option exercise definition is essential because it triggers ownership rights, tax consequences and dilution on the cap table. Option exercise may happen during employment, on exit, or at the end of a vesting period, depending on the option plan structure.

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Disclosure Notice: This communication is issued by Undo Capital Limited (“Undo Capital”) and is provided strictly for informational purposes only. It contains general information and should not be relied upon as accounting, business, financial, investment, legal, tax, or other professional advice. Undo Capital is not regulated by the Financial Conduct Authority (FCA) and does not provide investment, financial, or tax advice. Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. Nothing in this communication constitutes, or should be construed as, a recommendation, offer, or solicitation to purchase or sell any security or financial instrument.
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Disclaimer: Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. We do not provide investment advice, financial advice, or tax advice, nor are we regulated by the Financial Conduct Authority (FCA). Participating in startups and early-stage enterprises carries inherent risks, including limited liquidity, absence of dividends, potential loss of investment, and dilution. Any decisions regarding investments should be made independently by the investor as part of a well-diversified portfolio.