Options are structured many ways. I recently cashed out on stock options that I had with my past employer. I purchased this stock on a promissory note, meaning that I didn't have to put the money up front for the stock. But, at time of sale (in my case the repurchase of my shares by the company owner) the full amount of the original stock purchase was due.

In reality at that point, I either got a check for the differernce between the original basis and current price if the stock price was higher, or I paid the difference at that point. Lucky for me, the sale price was higher.

I should also note that I did not have the right to exercise the options when I wanted to. My company got to choose when they would repurchase my stock, other than if the company had sold. At that point, the note was due and option exercised.