The main trap I'm aware of is that exercising a stock option is considered employment income of the difference between strike and exercise price, but selling shares is considered capital gains/losses on the change in value.

So, if you exercise some options, it'll trigger a tax bill on the income. No problem, at tax time you can either pay cash or sell shares to cover. But if in the meantime the company tanks and the stock drops to zero, that's capital losses and doesn't cancel out the tax bill on the income.

Basically you want to exercise only when you're able to sell right away.

http://www.theglobeandmail.com/globe-investor/personal-finan...