As an employee at a startup, it is common to receive stock options as part of your compensation package. An option is the right to buy shares in a company at a set price after a certain date. Options are all about timing. Here are four dates you’ll want to keep in mind to understand how your options translate into value over time.

Grant Date

The grant date is when the stock options are given to you. That date is often the effective start date listed in your employment contract. If you’ve already been working for a while without an employment contract (which is common and fine), it might be worth trying to negotiate that your grant date should be backdated to when you started working. If founders plan to give themselves options, then incorporating as soon as possible will allow the founders to set a grant date and start their vesting.

Vesting Schedule

You won’t actually have the ability to exercise your options (i.e. buy shares) until a pre-determined amount of time has passed. This is called a vesting schedule. Let’s say you are granted the option to buy 75 shares in your company, and your options vest annually over three years. This means that 1/3 of your options vest each year. The clock starts ticking on the grant date. On the one year anniversary of your grant date, you have the right to buy 25 shares; on the 2nd anniversary, 50 shares; and on the 3rd, you have the right to buy all 75 shares.

Some vesting schedules are set up with “one year cliffs,” whereby a large chunk of the option vests after one year and the remaining portion vests gradually thereafter on a month-to-month basis. Using a cliff with subsequent gradual vesting gives you a bit more flexibility in planning your departure.

Which do you want? A vesting schedule with a cliff is more common, which is good for you since that’s the schedule that benefits you more. Push for it if you can, and ask for as large of a cliff as possible.

Expiration Date

Options also have an expiration date, after which you can no longer use them. The expiration date tells you how long you’ll have to make a decision on whether or not this company will be a success. Remember, to use your options you have to purchase company stock, so you will be dipping into your own savings. You want the expiration date to be as long as possible so that you can: 1) delay putting up the cash; and 2) get a better feel for whether the stock will be worth purchasing.

Exercise Date

This is the date when you exercise your options and buy stock. Most people think exercise date is the most important because this is the date you’ll make your money. However, to actually make money you have to sell the stock. If your company is not publicly traded, like almost all startups, selling stock acquired through options may be difficult, if not impossible. To find a buyer, you will most likely have to wait until the company either: 1) becomes listed on a publicly traded market; or 2) is acquired by another company. The real reason exercise date is important is because this is when you are taxed on your options.