[DesertCat]

Also, how long do you plan on staying with INTC? Typically employee options expire in ten years or when you leave. If you believe you can hold them for a long period you would be giving up some significant option value. For example, the Jan 2010 $20 call options are selling for almost $9, effectively you would be selling more valuable (if the expiration can be longer than 2.5 years) options for only $6 and paying taxes to boot.

For example of the benefit of long dated options, if you think INTC is fairly valued now, and will appreciate at 10% per year, then you might expect it to trade around $35 in three years, making exercising your $20 options worth $15 instead of $6. That's a 150% increase in option value froma 35% increase in the underlying stock, showing how the leverage of options can pay off over long periods.

This assumes you are comfortable estimating Intel's real value. If you think it's significantly over valued then selling the options is probably reasonable. If you can't estimate Intel's value, then think about it as a portfolio allocation problem.

My usual approach to employee options was to view them as a component of my entire portfolio, i.e. my net worth. If options are a large percentage of your savings, and are greater than a years income, you should think about lowering their allocation. If they represent a small portion of your earning power or net worth, then holding as a speculation is probably fine.

And if you ever think your employer is struggling and your job is at risk, you should always lower exposure to their stock. You don't want the stock to crash at the same time you get laid off.

Also it's been a long time since I dealt with employee options, but the usual strategy was to exercise, and hold a year to get long term capital gains. This burned a lot of people during the bubble. Not sure of the correct tax strategy today but you should research the tax implications.