Good morning fellow monkeys, I decided to post in the IB section to get more traction.
I was recently given a RSUs+Stock Options package with a 4 year vesting period (25%/period) and 7y exercising period for the options. This obviously incentivize me to stay long term, especially since the CAGR on the company's stock 20+ years public history is very attractive. I want to understand better what are the strategies that I can use to minimize tax impact, and the risk/reward mindset of exercising options and trying to time the market. It's easy to focus on the upside, but I also want to be pragmatic about this and lock in some cash when I should.
In other words, what are your personal experience in dealing with options? I could think of it as a bonus and not touch it and let it grow hoping to get lucky with the market as I get closer to the expiration date, or I could exercice some in a few years to use as down payment for some real estate... just something to think about.
Thanks for your time.
Bump
Is this GHL?
No this is a F500 company.
I'm payed with RSU comp, and I personally think about it just in terms of "if this was cash, would I keep in all in XXX stock?" The answer for me is almost always no, but that is dependent on your particular situation.
Yeah that's my mindset as well. I'm trying to be tax efficient (hold 12 months after grant date to pay 15% on capital gains) but also pragmatic about diversification of my assets
I usually sell immediately so I don't worry about getting to the short term cap gains rate. With respect to the options, I know that with private startup options you pay tax on the strike price no matter when you exercise. In that situation there would be no reason to exercise now vs waiting. There is also the 83(b) option but that is more complex and I'd consult with a tax expert about whether it's possible / beneficial for you.
Yes if you sell right away then no capital gains that's a good point. Options are difficult to deal with because you're giving up possible huge upside by exercising early. I guess it will all depend on how much risk you are willing to take. My options are granted at the market price on the date of the award so the first vesting batch doesn't hold much value initially but decisions will have to be made in a few years... I'm not sure Trump won't have broken the US stock market by then.
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