Exercise financing explained
Third-party financing lets you exercise without your own cash, in exchange for a share of the upside.
How it works
A specialist lender funds the strike price and often the tax, secured by the shares themselves. Most deals are non-recourse: if the company fails, you owe nothing beyond the shares.
What it costs
Expect a fixed fee plus a percentage of the value at exit, which can be a large share of the gain. Model the all-in cost against simply exercising fewer shares with your own money.
When it makes sense
Financing fits expiring options in a company with real liquidity prospects and a spread too large to fund personally. It is expensive insurance, not free money.
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