Hey team!
I work for a traded tech company that pays me partially in its stock. Every time my stock vests, I want to sell it for cash in order to decrease my exposure to that specific company. I am fine if this rebalance takes a while: I don't need the cash right now. Knowing this, I am looking to maximize my gain.
So let's say I get 100 stocks of $AMZN every 6 months. Is the following modus operandi optimal?
- Upon it vesting, sell an OTM covered call (˜45 days out, delta around .30)
- IF CC's price goes to ˜half of its value, buy-to-close and go back to 1
- IF price rises to ITM, I'm assigned, this is fine.
Knowing that I'd like to sell within ˜6 months (next vesting date), but don't mind when: would you do something differently?
Would love some thoughts about things I may be missing.
Maximizing my gain from selling 100 $AMZN stock, vesting twice a year
byu/moonandantartica521 inoptions
Posted by moonandantartica521
10 Comments
Seems reasonable if expect the stock to keep going up. Dte might be a bit on the longer side given the delta.
If expect stock to trade sideways or go down could get some downside protection by moving closer to being in the money for a higher premium to offset the stock falling or not doing much.
hold it forever my dude believe in bezos
Check the prospectus. There’s a high chance (like 99%) that you aren’t technically allowed to trade in derivatives on the ticker. Additionally, I’d be surprised if the stock plan account that the stock (ISOs?, RSUs?, ESPPs?) hits has options of any level. You’d have to transfer to an individual brokerage, and likely will lose your cost basis so need to track separately.
There will also be some tax efficiencies to be had by holding, clock starting on those will vary based on type. RSU and ESPP = closing price on vesting day. ISO = exercise price.
That being said. The goal being deleveraging exposure to the company you work for, and assuming you received them at a discount (20% maybe) -> If it’s actually AMZN the IV isn’t crazy so the premium isn’t either. I might just go ATM weeklies until called away.
If you want to sell just sell. Covered calls are not a way to get a free money when you want to sell.
If the stock tanks you’ll lose a lot more than the credit received.
I would sell ATM option choosing the time I want to get rid of the stocks.
I often choose 1 week. Once I have decided to sell it.
You’re probably not allowed to trade options on your employer’s stock
Verify what I say. Not an advice. In contradictory to what others say, you 99.99% do not have limitations to do options, unless you are close to L10. AMZN iv is too low, you won’t gain any money from selling CC. I’d set just set limit orders and chill. Another idea is to hold for a year and then do this to lessen taxes.
I work in tech and buying or selling derivatives of my company stock is strictly forbidden for all employees at any level. If caught, one can be terminated with cause.
I’m so glad you asked this question. I was about to execute a similar trade.
I guarantee Amazon prevents you from trading options on Amazon. Any public tech company prohibits it and you can get in deep shit if you get caught.