> If you have the spare cash, buy them as early as you can
Why would you want to do this? Wouldn't it be better to wait until the company is about to be acquired or IPO so you're not spending money on something of no value?
Depends on the type of options you have. If you have ISO, yeah. I'd probably wait because there are "games" you can play to not impact your total tax bill for the year (i.e. not trigger AMT).
If they are NQSO, the difference between your option price and market price is a taxable event. So if your option price is $1 and the company IPOs and has a price of $12 when you exercise, you owe taxes on $11 per share (this is a gross oversimplification). Now if you had purchased before the company is acquired/goes public, the price might just be $5 so your overall tax bill is lower. You exercise at a lower price and hope the price goes up.
You're usually correct, except for two things (in the US):
1) Holding stock for a year before selling is taxed at the lower long-term capital gains rate (~20% vs ~39.6% at the highest brackets).
2) Exercising an ISO is seen as a taxable income for the purposes of the Alternative Minimum Tax, so exercising late (when the difference between FMV and Strike Price is high) has a higher chance of incurring an AMT burden, whereas exercising early does not incur an AMT burden (because the spread is small) nor a normal tax burden (because this is how ISOs work).
Why would you want to do this? Wouldn't it be better to wait until the company is about to be acquired or IPO so you're not spending money on something of no value?