Financial Planning › Advanced Strategies

The wealth you can create from stock options is not self-generating. This article from a distinguished wealth advisor explores strategic ways to think about decisions to exercise, hold, and sell.

Podcast included! One of the most vexing investment decisions you will ever make involves when to exercise your stock options and when to sell the shares. This article series will give you the tools for determining that time.

Podcast included! For some employees, the value of their equity compensation plans represents their largest investment. With so much at stake, making the right decisions is critical. Intelligent planning can maximize value while minimizing risk.

Employee stock options are complex. It's easy to make costly mistakes. But with the right moves, options can create significant wealth. In this article, three stock option gurus present wisdom for your contemplation.

Your tax return can help you develop your tax-planning strategy for stock options, restricted stock/RSUs, and holdings of company stock. Now that you have filed your first tax return after all the changes under the Tax Cuts & Jobs Act, you can make more accurate projections for the year ahead. Consider your future income, taxes, AMT risk, and use of capital-loss carry-forwards. Review the details of your stock plan documents to develop a program for option exercises and restricted stock/RSU vesting.

Podcast included! When your stock options vest, you need a strategy to make the most of their wealth-building value. However, no single strategy fits everyone. This article discusses various approaches to planning your option exercises.

Your option grant terms and the behavior of your company's stock price are only part of your financial-planning story in volatile markets. Equally important is the price movement of what you will buy with the proceeds from an option exercise and stock sale. As this article explains, relative changes in price, not absolute changes, are what matter.

Weighing a Roth IRA conversion is complicated enough, but the complexity can explode when you add in stock option exercises or the vesting of restricted stock. Let's take a look at how this can work in real life through a case study.

When stock markets rise, question the urge to exercise your options for quick profits as soon as possible. Exercising too early can be a big mistake.

Even when stock prices are volatile, there are still opportunities to achieve gains from stock compensation. This article presents a range of ideas to consider: buying stock now to swap later, exercising and holding ISOs, or making a Section 83(b) election for restricted stock.

This article series provides an analytical framework to help you evaluate the impact of an income tax increase at any point in the future, whether the shift is caused by changes in tax law or by an influx of compensation that pushes your income into a higher tax bracket. Part 2 looks at restricted stock and restricted stock units.

This article series provides an analytical framework to help you evaluate the impact of an income tax increase at any point in the future, whether the shift is caused by changes in tax law or by an influx of compensation that pushes your income into a higher tax bracket. Part 1 looks at nonqualified stock options.

With tax changes in mind, now may be a good time to re-evaluate your current financial-planning strategy. Should you take action with stock options now? Part 3 looks at incentive stock options.

Podcast included! In Part 2 of this series, the author considers reasons and strategies for diversifying away from a concentrated position in company stock. A handy flow chart at the end encapsulates his exercise strategy.

Podcast included! Deciding which stock options to exercise and when can pose a dilemma. Part 2 of this series focuses on reducing risk when you exercise. Quantifying a risk/return number can determine the point when holding your options is no longer desirable.

If the majority of your net worth lies in unexercised stock options or company stock, it may make sense to sell a portion to reduce the concentration risk while holding on to a portion to participate in future appreciation. However, if most financial goals can be reached without these proceeds and your position is not heavily concentrated, other strategies are worth exploring. One that is gaining popularity is writing call options on vested ESOs to generate some income.

When should you exercise nonqualified stock options? You need a decision-making process that removes guesswork and emotions. Otherwise, you're likely to exercise too soon or too late.

This PowerPoint presentation provides financial and wealth advisors with an overview of trends in equity compensation grants that can affect their clients and their practice.

For restricted stock, you can make what the tax code calls a Section 83(b) election to be taxed immediately at grant instead of later at vesting, when your stock price, and thus your tax rate, may be much higher. However, before you make your decision, realize that...

Let's look at the various tax permutations for nonqualified stock options (NQSOs)...

The outcome depends on how well your company's stock price does in the years after the grant date and on the ratio of stock options to restricted stock/RSU shares, among other factors. To calculate whether the appreciation of stock option gains equals or exceeds restricted stock/RSU gains, you need to...

The value of an option consists of two elements: time premium and intrinsic value. Intrinsic value is the difference...

Before you even analyze the decision, you should learn the basic facts and risks of the Section 83(b) election. Once you understand it, the election can make sense in certain circumstances, including...

The traditional strategy with NQSOs recommends waiting till...

Tax considerations alone should not drive the choice of what stock you sell. For example, if you are holding appreciated company stock from a nonqualified stock option (NQSO) exercise or restricted stock vesting, you will be taxed on...

A concentrated stock position occurs when a significant chunk of your net worth is tied up in a single stock. Strategies for hedging, diversification, and liquidity include...

Deferral means delaying the standard tax treatment that would normally occur when you receive income or undertake a specific transaction, such as...

A number of tax law provisions and interpretations that may affect your stock grants occur in...

Estimated-tax payments for the tax year are typically due on the 15th of April, June, and September and on January 15 of the following year. If you are paying estimated taxes, one strategy is that just after the start of an estimated-tax period you can...

Experts suggest several strategies for you to consider when you exercise ISOs and are concerned about triggering the alternative minimum tax. For example, near year-end or at the beginning of the year, you can...

When you are intermittently subject to the AMT, tax advisors suggest different planning ideas on shifting income and deductions. You have much less flexibility in your planning when you project paying AMT for the next several tax years. A basic plan is to...

SEC Rule 10b5-1 provides a defense against charges of insider trading if you later trade stock while you know confidential, important information about your company. A Rule 10b5-1 trading plan is a program for the preset purchase and/or sale of your stock that meets the requirements of this SEC rule, including the need to...

Before you rush into exercising, you may want to do some calculations with potential future stock prices and tax rates. When you exercise earlier than necessary...

Capital gains harvesting can be effective when all the issues are understood. By selling stock at a gain and then buying it back at the current price, you create a new...