If you're like most professionals with Incentive Stock Options (ISO) or Non Qualified Stock Options (NQSO), when it comes time to exercise, you will either use cash on hand or sell your current stock to generate cash for the purchase.
An alternative way to exercise is a “stock swap.” In a stock swap, the exercise price is paid with shares of company stock you already own (payment is made using "swapped" shares). The main advantage to this method is that you do not need to sell your company stock to generate cash to pay the exercise price.
This defers taxation on the swapped shares, which would have occurred by otherwise selling them first to generate cash to exercise/hold.
The tax laws consider the swap a tax-free exchange instead of a sale of shares. An ancillary benefit to the swap is somewhat reducing your concentration in company stock compared with a cash exercise, in which you invest additional cash in your company shares versus a diversified asset.