# Sell some Share Options or keep ?



## aristotle (9 Jan 2020)

Is there any general advice on what to do with Share Options? I have read some peoples opinions that you are already paid a salary from the company so its a good idea to sell at least some of the share options just for diversification. Sell 10-20% and keep the rest for a few years?

Maybe its a personal decision based on your overall financial position, anyone got any thoughts? And I suppose your belief in the shareprice but then anything can happen in the world economy which could tank the share price.

As I write this it seems prudent to sell 20-25% and just take some of it and leave the rest for 5 years.


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## Gordon Gekko (9 Jan 2020)

My view is that they should all be sold as soon as possible. One’s fortunes are already tied to the wellbeing of the relevant company.


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## Easel (9 Jan 2020)

It depends on personal circumstances. If you are carrying expensive debt I would sell them upon receipt any pay off the loans.

If you are comfortable with a well funded pension, no debt outside of a mortgage with a good LTV I would sell all the shares once they are vested. With the proceeds you can make additional contributions into your pension to get a more diversified exposure to global equities rather than a single company as Gordon mentions. Alternatively you can pay down your mortgage. Again this decision is dependant on your circumstances.

The common theme when this comes up is to not hold on to the shares once they have vested as you are already highly invested in the company you work for.


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## MrEarl (10 Jan 2020)

Gordon Gekko said:


> My view is that they should all be sold as soon as possible. One’s fortunes are already tied to the wellbeing of the relevant company.



Agree 100%

Diversification is the name of the game.


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## Boyd (10 Jan 2020)

Does shares vs share options make any difference here? I assumed it would as with share options you haven't paid anything upfront until you decide to exercise the option? We are getting share options this week and I was planning to hang onto them until the vesting period expires and then check the option price versus the actual price and possibly do a "bed and breakfast" transaction of buy and sell in one go.


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## Techhead (11 Jan 2020)

The advice to sell is the agreed upon. I keep some of mine because I don’t need them right now and can go long. I am also ok with dips. Depends on your risk profile.


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## cloughy (11 Jan 2020)

Is there an income tax liability on exercising the options, so be careful if going to hold the shares, as the price on exercise date less option price is liable to income tax, and then all gains based on selling price less price on exercise date.
If you exercise and pay income tax, and price falls then you gave a capital loss, but already paid income tax. So if share price will rise better to exercise as capital gains tax less than income tax, but if unsure then either exercise and sell, providing market price higher than option price, otherwise hold option, and if prices rise then higher income tax, but also higher real gain between sales price and option price.
If me id probably exercise and sell enough to cover option cost and income tax, as rest have cost you nothing.
If i have got any of the above wrong, feel free to correct me, long time since i had options or bought shares directly, been there done than, have the scars to prove it.


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## losttheplot (11 Jan 2020)

I don't think it's income tax, it would be RTSO, this is payable within 30 days of exercising the option (buying), even if you don't sell. So if you are going to hang onto them, you'll need the money to pay the tax.


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## cloughy (11 Jan 2020)

Is RTSO not just the form you complete with the payment, but the amount of tax is the difference between price at exercise date and option price at your marginal tax rate plus USC etc. so whilst not income tax, same calculatipn, but onus on you to calculate, complete form and make payment


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## losttheplot (11 Jan 2020)

Same calculation, but has to be paid within 30 days.


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## Techhead (11 Jan 2020)

Is this a share purchase program ? If so then its RTSO in 30 days on the discount you got. If you keep the shares then that’s it. If you sell the shares and the stock has risen post the vest date then you are liable for CGT.


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## Boyd (11 Jan 2020)

Ugh why is everything about shares in Ireland so complex! Getting the details next week on my options thing.


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## ashambles (13 Jan 2020)

The advice to exercise employee stock options as soon as possible implicitly values those options only at what the profit is on the day they vest, which is wrong.

The value you place on employee's share options is not the profit if you exercised them today, the value would be what it would cost you to buy those options. The fact that you can't buy these options in the market  might you some idea of their value.

You can't get options to buy a share at today's price in 1-4 years time, and on top of that be able to exercise that option once vested at any time post vesting (up to usually 7-10 years). 

They're a retention tool, not a genuine stock option that could be provided by the stock market.

To compare potential worth of shares versus options.
Company x has shares worth $100 a share, you own 10 shares. That's worth $1000 today.
You have 1000 options given to you at $99, so you're up $1 a share, that's also worth $1000 today.
Next year, the share price rises 20%, to $120, if you own 10 shares have gone from $1000 to $1200.
However the options would be gone from $1000 to $21,000.

That massive difference in potential returns, is why you've to think differently in terms of diversity regarding options. If you diversify from options to simple shares, then you've gone to a less potentially profitable asset.

In the US I believe if you exercise and don't sell you can avoid income tax, paying CGT instead on your eventual profit. If you exercise and sell quickly, then you pay income tax.

In Ireland it's income tax on your initial profit up to the day you exercise, so there's much less incentive to decide not to sell, in fact the RTSO pay tax within 30 days requirement is to try to force you to sell quickly.


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## Techhead (15 Jan 2020)

That RTSO is anti investor.. they know most people have to dump the stock to pay the half in tax..


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## aristotle (25 Feb 2020)

Well I have decided to sell 25% of my share options shortly and the net proceeds will be used to pay an AVC into my pension for 2019 tax year.

And I might just do the same over the next 3 tax years. That means I can save more cash over those years.


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## Thirsty (26 Feb 2020)

I wouldn't sell in this current market, sit tight if you can


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## aristotle (27 Feb 2020)

Thirsty said:


> I wouldn't sell in this current market, sit tight if you can



Thankfully the share price has not been going down recently so I am ok from that view.


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