There are a number of additional factors not modeled here that affect real world decision making. First, most option grants revert ownership to the company if n

There are a number of additional factors not modeled here that affect real world decision making. First, most option grants revert ownership to the company if not exercised within 90 days of leaving the company. If the company is doing well, it only makes sense to leave if you can exercise. But the problem with exercising is that there can be enormous AMT tax liability if the company is doing well and the valuation has gone up substantially. For early employees, the taxes can easily be 10-20x the exercise cost or more. But since the stock is illiquid, there is no market for selling some of the stock to cover this liability. If you front the taxes with your own money (or worse, a loan) you are now in a position of enormous risk. If the company falters or collapses, your downside is huge and you can be hundreds of thousands of dollars in debt.