The post-termination exercise period (PTEP) is the limited time — historically 90 days, increasingly extended to several years — in which a departing employee can exercise vested options before forfeiting them. A short window can force employees to pay the strike price and tax immediately or lose the options.
Founders increasingly offer extended PTEPs to make equity genuinely valuable to early employees, though extending past 90 days converts incentive stock options (ISOs) into non-qualified options for U.S. tax purposes — a trade-off to weigh when designing an option plan.