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Posted by
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Is stock options worth the risk with free cash?
Posted by L S Usetheforce on 11/29/16 at 11:47 am00
My company allows for stock options (ticker MD), I max out 401k make to much for a Roth. They sell me the stock at a 15% discount of up to 25k. If I bought 25k for before end of year.....and then sold it next year to get my free cash back it equates to about 1500 profit. I could also hold it as it has performed well in the past.
I'm worried about capital gains though and its effects on the my obligations to IRS. Is this a fiscally responsible thing to do with free cash?
I'm worried about capital gains though and its effects on the my obligations to IRS. Is this a fiscally responsible thing to do with free cash?
This post was edited on 11/29 at 11:49 am
re: Is stock options worth the risk with free cash?Posted by iluvredboxx on 11/29/16 at 2:24 pm to L S Usetheforce
You have an automatic 15% return, whatever money you have that you want to invest after 401 and IRA, I would take advantage of this. Not many places you can get an automatic 15% return regardless of tax implications. My 2 cents.
re: Is stock options worth the risk with free cash?Posted by PlanoPrivateer on 11/29/16 at 3:39 pm to L S Usetheforce
15% instant profit. You say it is doing well and if it continues to do well you can hold for a long term capital gain. Two other thoughts. If you continue to work for this company don't let the stock become a large percentage of your holdings. And, if you get worried it may go lose value down the road you can buy puts for protection (although there isn't a market for puts on all stocks).
re: Is stock options worth the risk with free cash?Posted by Hawkeye95 on 11/29/16 at 4:21 pm to L S Usetheforce
every comnpany i have worked for has offered this. I have tried to game it every time and for whatever reason, it never works.
use it if you are a long believer in the company but don't buy into it as you think this is free money.
use it if you are a long believer in the company but don't buy into it as you think this is free money.
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re: Is stock options worth the risk with free cash?Posted by Jag_Warrior on 11/29/16 at 4:21 pm to L S Usetheforce
I think that you mean an ESOP, not options.
re: Is stock options worth the risk with free cash?Posted by L S Usetheforce on 11/29/16 at 4:37 pm to Jag_Warrior
yes that's what I meant...I see they aren't the same thing.
This post was edited on 11/29 at 6:40 pm
re: Is stock options worth the risk with free cash?Posted by Hog on the Hill on 11/30/16 at 12:07 pm to L S Usetheforce
What is the vesting schedule? The people who are saying that this is "15% instant profit" are wrong, because you can't just sell the stock immediately at market price. You usually don't get full ownership of shares until a later date. In that time, share prices could drop (or rise, of course). But either way, it's not "instant profit"
It can pay off, but you have to be careful, and you should limit how much of your income you risk on this. That 15% is not guaranteed--you're still taking a risk.
It can pay off, but you have to be careful, and you should limit how much of your income you risk on this. That 15% is not guaranteed--you're still taking a risk.
quote:Not instant profit... and what are the rules about buying puts on ESOP shares? I work in healthcare so I've never had access to an ESOP. I kind of doubt that you can buy puts in a plan like this until you have full ownership of the shares...
15% instant profit. You say it is doing well and if it continues to do well you can hold for a long term capital gain. Two other thoughts. If you continue to work for this company don't let the stock become a large percentage of your holdings. And, if you get worried it may go lose value down the road you can buy puts for protection (although there isn't a market for puts on all stocks).
This post was edited on 11/30 at 12:10 pm
re: Is stock options worth the risk with free cash?Posted by Shepherd88 on 11/30/16 at 1:14 pm to Hog on the Hill
Hog is correct, if it's an esop you're more than likely not going to be able to sell immediately.
If it is stock options then you can.
If it is stock options then you can.
re: Is stock options worth the risk with free cash?Posted by L S Usetheforce on 11/30/16 at 3:57 pm to Shepherd88
6 month hold...before you can sell. its 1 year low is 59
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