Early exercise is the action of exercising stock options before they have vested. The holder pays the strike price on unvested options and receives restricted stock subject to the company's right to repurchase the unvested shares at strike if the holder departs. It is a tax-planning move that starts the long-term capital-gains and QSBS holding clocks earlier, paired with an 83(b) election filed within 30 days of exercise. It is a powerful structural move when used correctly and a cash-binding mistake when used without understanding the implications.
The mechanic of early exercise: