If you’re confident the sale of the stock in one year would net a profit, that one year between exercise and the sale allows for long-term capital gains treatme

If you’re confident the sale of the stock in one year would net a profit, that one year between exercise and the sale allows for long-term capital gains treatment (usually 15% or whatever it is these days) vs short-term capital gains, which is taxed at your income level. Worst case, it can be a 37% (federal) + 13% (CA) tax hit. Doesn’t make most people too happy, if you’re lucky enough to hit it that big. Not a CPA, I’m sure there are different situations, but this is the simplest explanation I know of, from experience.