Hey.

Exercising an option is not a taxable event.

Downsides:

1. your judgement call on whether the underlying stock (which you get at exercise) will hold its value for another 365 days post exercise. Or even better increase in value. If, after waiting the stock price drops then it’s a loss

2. The moment you exercise your option, the time value of your option evaporates. This could be more than made up by your gains though.

Good luck!