[craigkerstiens]

To add to the vesting discussion, there's typically a cliff. What this means is that you have access to none of your options until that time, a 1 year cliff is pretty common. If you see in your packet something about a 1 year cliff this means that on you're 1 year anniversary you have access to 20% of your available options. Typically you'll then vest the additional amount each month following until you've fully vested after 5 years.

In addition to exercising your options during a liquidity event it's common that a company requires you to either exercise or expire your options when you leave the company. There's typically a time period allowing you to decide to exercise these or not, often it's 30 days after you leave that you have available to decide to purchase your options or not.

[bmelton]

What happens if a liquidity event occurs within the first year, before the cliff? Do I still have my options, and am just unable to exercise them?

[arfrank]

It depends on the event. You would still have the options, but might not be able exercise any of them until a cliff is reached. The event might also include a trigger of some sort that accelerate the cliff/vesting schedule, but I think this is usually just a mechanism for founders & early employees.