Augustine wrote:
- quote -

A surprising number of people seem to simply exercise their in-the-money
options at vesting, and sell the stock. As you probably know NQSO's
trigger tax at exercise so if you hold the stock you take on the risk
that it will drop in value, while still leaving you with a tax bill. So
while you could hold the stock and pay the capital gains rate on further
gains, those gains might turn into losses (as it sounds like they would
have in your case).

There's no set answer though, you have to balance that risk of leaving
money on the table with the risk of walking away with less, or nothing,
because the options become worthless. It's a bit easier if you have
multiple batches of options and/or unvested options (that you don't
exercise) that would still allow you to benefit from any upside in the
stock, despite cashing in some of your chips.

-Tad

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Augustine wrote:

- quote -

?? If they were all forfeited, what is this question about?

When I referred to the $60 calls (your follow on question), I meant
this; There is an active market in options for most actively traded
public companies. The company options you got may not be bought or sold
in the open market, but you can use the options market to implement a
protective strategy. You have a (company issued) option with the price
of $30. If the stock is now $60, you can sell through your company and
pocket the $30. But then you look (through your broker or Yahoo, etc.)
and see that the $60 call (the right to buy the stock at $60) by next
december sells for $10. So you buy one contract (100 shares) and spend
the $1000.

In this example, say the stock goes back down to $30. You made $3000,
less the option you bought, so $2000 or 2/3 your potential gain. But if
the stock went on to $100, that option is now worth $40, and you made a
total $6000.

Joe

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On Jun 18, 6:59 pm, Rich Carreiro <rlc-n...[at]rlcarr.com> wrote:
- quote -

They were forfeited after 90 days, all of which way underwater...

Thanks.

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joetaxpayer wrote:
- quote -

Speaking of corporate ethics, just get your Comptroller to redate the
options to the lowest price for each year. I hear that works quite well.
Chip

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On Jun 18, 7:23 pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

What does this expression mean?

- quote -

That's an idea.

Thanks.

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On Jun 18, 8:51 pm, kastnna <kast...[at]auburnalum.org> wrote:
- quote -

When I sold some to install wood flooring, I saw my Roth IRA being
almost totally phased out. It goes to show how much the middle class,
even when once every now and then we strike luck, is crushed.

But I guess that paying taxes is better than seeing the options
drown...

Thanks.

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On Jun 18, 5:16*pm, Augustine <evan...[at]mailinator.com> wrote:
- quote -

Other than the (very valid) considerations mentioned previously you
may also want to factor in taxes. Because your options are non-
qalified they are governed under section 83, I believe. The earnings
are includable in taxable income. As such, you don't want to go
jumping into higher tax brackets and potentially crossing all manner
of thresholds/phaseouts. If your stock options expire soon you may not
have much choice, but otherwise keep the taxes in mind.

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Augustine wrote:

- quote -

Say the option has a strike of $30, but the stock now trades at $60.
Sell some shares, but buy calls at $60 strike. If the stock continues to
rise, you are out the premium you just paid, but continue to participate
in the rise. If it drops, at least you took some money off the table.

The other choice is to sell X% of shares each period over the life of
the options. If there are 2 years left, sell 10% every 2 months or so,
riding the up and down of the market.

The market always has risk, and options, generally more so.
Joe

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Augustine <evandro[at]mailinator.com> writes:

- quote -

What are the termination conditions on your option grant?
Many option plans say that any options not exercised within
some amount of time after termination (90 days is not atypical)
are voided.

--
Rich Carreiro rlc-news[at]rlcarr.com

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I left my previous job with thousands of shares granted as NQSO under
water. Not that they've always been under water. As a matter of
fact, their value reached a peak of 2x their exercise value, when I
sold a few to install wood flooring at home. Yet, at that time, I
even entertained paying off my house with them, just to give an idea
of their value.

Does anybody know about a reasonable option exercise regime in order
to ride the crests and reap some profit, even if not the most profit
the possible, but at a lower risk?

TIA

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