Formulaic employee stock option selloff

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Joined: Sat Jul 26, 2014 2:27 am

Formulaic employee stock option selloff

Post by moral_hazard » Wed Oct 11, 2017 11:13 am

Howdy! I work in tech and just left a company where a large part of my compensation was incentive stock options. The company is still early stage but I anticipate that if they stay on track (big if) I'd be in a position where I'd want to start to sell in the next 6mo-2yrs. I want to take my psychology out of the question and ideally 'pre-commit' to a strategy of selling off shares at particular price targets (or alternatively, viewing it as a part of AA and rebalancing out). Are there useful strategies or formulas for this? I haven't seen any best practices here, but I want to avoid some of the mistakes I made with my first company (holding out too long during the peak of the hype). Taxes are not a concern here.

My info:
Age: 29
Currently my concentrated investments (private equity / stock options) account for about 10-15% of portfolio, but that number could change quickly if the investment in question raises funding or updates valuation numbers. They are split across 3 companies. The rest (~90%) is in Vanguard index funds (three-fund portfolio).

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Joined: Wed May 21, 2008 12:36 am

Re: Formulaic employee stock option selloff

Post by HornedToad » Wed Oct 11, 2017 11:16 am

I like this article for it as different options to consider. ... -ipo-wide/

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Joined: Wed Apr 02, 2014 11:27 pm

Re: Formulaic employee stock option selloff

Post by BigJohn » Wed Oct 11, 2017 4:02 pm

How much of your net worth is tied up in these options? If it's more than 10%, I'd personally shy away from price targets. You could end up holding all the way down if things don't go well. At one point I had a significant portion of my net worth in company stock and decide to get it below 10% by selling X% at the start of each quarter regardless of price.

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