>>Doesn't it depend on the exercise price, if low enough, your out of pocket amount could be outweighed by the benefit of a potential capital loss, and low exercise means more ordinary income on exercise which means more shares sold to satisfy withholding
Take the extreme case of a $0.01 exercise price and a stock that goes to zero (from say $20) after the exercise date.
In both cases you end up with nothing of value from your shares, but in the case of an exercise, you end up with a short-term capital loss of about $20 per share (on about 70 shares per hundred options you held originally).
Peter
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