Normal course of options-iso or nso?

Ask them

Can be both. Ask them explicitly

Yeah depends on the company, ISOs are more common but I worked at a startup that has only given me NSOs. Also therw are some laws around how many exercisable ISOs you can get in one year, so sometimes you get a split of both. But to sum it up, just ask

Thanks folks! As an extension to my question I tried reading the diff up but was bit confused can someone summarize the difference or point me to an easy to understand link? Thanks

Generally ISOs are offered by startups. Be aware, per IRS, once you leave a company you only have 90 days to exercise your options as ISOs; after that they become NSOs. ISOs are more advantageous because you are not taxed upon exercise. With NSOs, you pay income tax on the difference between the strike price and fair market value in the year you exercise the options.

It’s impossible to tell which it is without getting the details in writing. Whenever possible, to whatever extent possible, you want ISOs not NSOs. The standard is ISOs for employees because it’s friendlier and easier to manage taxes on it. ISO is a special form of options, with increased restrictions, that employers can give out to employees. The main benefit is that you don’t have to pay tax on the difference between your ISO price and the company’s market value when you exercise it (I.e. when you buy the stock) — you only pay that tax when you sell your stock and have some actual cash with which to pay taxes. Say you have an option to buy 100 shares for $10 each. One day, when the market value of the company happens to be $15 per share, you exercise your options (you pay $1k and now have 100 shares). If these were NSOs, you owe tax on $500 income that year (you paid $1k for those shares when they were worth $1500). If they were ISOs you owe no tax. Then, another day maybe a couple of years later, say the company goes public and you sell your 100 shares for $35 each. If those were ISOs you will pay tax on the delta between $35 and $10 (so you’ll pay capital gains tax on $2500 of income that year). If those were NSOs, you will pay tax on the delta between $35 and $15, so you pay tax on $2000. As you can see, either way Uncle Sam will get your tax dollars on a total of $2500 income, because you bought 100 shares at $10 and sold them at $35. But with ISOs, you don’t have to pay any of that tax until later, when you actually sell your stock — this is so that employees don’t end up having to pay tax when they exercise options in companies that aren’t public yet. This is super important because, for example, options often expire if you leave the company, so a common scenario in startups is that you’ll join a company when the company’s valuation is peanuts, get paid in large part with options to buy lots of stock for peanuts (but that you’re not allowed to sell because the company is still private) and then leave the company some day before it’s public, which often causes those options to expire. So instead of losing all that pay for leaving, ISOs let you buy a boatload of options at a still-private company that you’re leaving, for peanuts even though the company’s market value is much higher now, without getting hit with a very large tax bill. It allows you to retain the value you’ve accumulated in the company and not have to pay tax on it until/unless the company goes public or gets acquired one day, when you can actually sell those options/shares for real money. Whenever possible, to whatever extent possible, you want ISOs not NSOs.

Thanks these are the best explanations I have had so far! Definitely will pin these for future reference!

I'm interested to here how all of this played out. The only way to know is to ask, but as mentioned by others, ISOs and NSOs can have very different tax outcomes. https://www.equityftw.com/articles/comparison-of-isos-vs-nsos