in this situation... say we have 1000 options and we have 2...

in this situation... say we have 1000 options and we have 2 choices:

-Convert into shares, cost $13,000

-Sell options at $5.60 ($5,600) and buy stock at $17 ($17,000)
Total cost = $11,400

First option costs more, but you have no tax implications
Second option is cheaper but you now also have a capital gain of $5600 which you’ll need to pay tax on ($5,600 used as gain as assumption here is, all options were free attaching ones so their cost price is $0)

$1600 is the difference between the 2 options on paper

But if you’re paying tax on your PBHO sale, (say you’re in the 40% bracket, your tax bill is $2240 on that gain) therefore making the first option (conversion) cheaper

hopefully this explanation makes sense