From: "anoop" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Cashless stock option exercise help!
Date: Mon, 8 Jan 2007 21:42:34 -0600
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PeterL wrote:

> That rule (and the ignorance of such) has indeed caused major financial
> problems for many silicon valley newly minted paper-rich folks in 2000,
> when their stock options turned to negative and they ended up owing to
> the IRS on worthless paper.

Here's one such sobering story.
http://preview.tinyurl.com/y93cbg
It's about ISOs (Incentive Stock Options) where there is
an advantage to exercising and holding as opposed to NQs
where there is no such advantage (which is what the OP was
asking about).  The AMT from exercising ISOs is what
affected most people in Silicon Valley.  With NQ is there
is no advantage to exercising and holding; one might
as well just wait to exercise and sell if one really thinks
that the stock will keep appreciating.

Anoop