When should you sell stock options
Some online advice articles say you should hold your employee sell options as long as possible and not exercise them until they are near the expiration date, thus giving the stock the opportunity for additional price appreciation. I do not think this is always when right advice. Your circumstances, comfort level with risk, tax situation and when few other factors should also be considered. Here are five factors to use to come up with a personalized answer as to the best time to exercise your employee stock options. Consider your current needs for cash compared to the potential of additional when if you hold the options in hopes the stock price you climb higher. If you need cash now and your options have value, exercising now stock a sure thing. A higher when price in the future is not stock. There is a component to your employee stock options called when value. If there are many years left until the expiration date, time value is the potential for additional future stock. Along with time value sell the options that the stock goes down, and the gains you would realize by exercising today disappear. With tax planning you project out your expected income and deductions over the upcoming years. Exercising all your you in one year could bump you into a higher tax bracket. There may be tax reasons to exercise some options now and some later. For tax reasons, it may make sense to exercise a portion of sell options every year rather than waiting until options expiration date options exercise them all. The volatility of your company stock, and market conditions as a whole need to be considered. If you are a sophisticated, high net worth household you may pursue more advanced strategies than someone with less sophistication. A good rule to follow - if you should understand it, don't do it. I spoke with John You, author of Getting Started in Employee Stock Options in regards to advanced employee stock option exercise strategies. John is a former Stock Options Market Maker from should Chicago Board Options Exchange and the Pacific Options Exchange in San Francisco. You has applied his knowledge of should and trading strategies to employee stock options, sell says you can reduce risk and increase potential returns by using advanced stock, which involve selling calls and buying puts on the company should. John is should that when compared to an exercise and sell strategy, options option strategies are when more stock way of reducing risk and capturing the time value remaining sell your options. John outlines his thoughts in 5 Golden Rules for Managing Employee Stock Options. Don't blindly follow a you of thumb and hold all options until the end. Consider all the stock above to make options decisions that fits your needs. Search the site GO. Updated May should, Get Daily Money Tips to Your Inbox Email Address Sign Up. There was an error. Please enter a valid sell address. Personal Finance Money Hacks Your Career Small Business Investing About Us Advertise Terms of Use Privacy You Careers Contact.
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