Dear @roalddahl14 , that is what I wanted to clear up --- if you just buy and then within a short time ( less than a year )you sell , it will be short-term gain treated as ordinary income and taxed at your marginal rate ( i.e. added to your other incomes and push you to a higher tax bracket ). If on the other hand, you hold for a year and then sell, the gain will be taxed at Capital tax rate ( for most people it is zero or 15% ).
Also note that if you exercise now and then leave USA and go back to India and then sell -- generally you will pay only Indian tax rate ( there may be indexing also ) . If you have stayed here more than 10 years, then US may want you to mark to market and want withholding at the market price gain ( even if you have not sold the stocks ). But this is of course all in the future.
Thank you
pk
