Stock Options
Way back in the hey-days of the dot-com era, my company awarded me with 600 shares of stock options. At the time, the share price was going up every day, and within a month it had already risen about 15 points above the strike price (making the options worth $9,000). Then all hell broke loose as the economy tanked, the markets went south, and my options were now worthless. One of the stipulations with the options is they were vested for 4 years, so there was nothing I could do but watch my "award" become worthless. I haven't followed the price very much lately as up until about 6 months ago the options were still underwater. By accident, I happened to look at the price earlier this week and saw in amazement that it was 1 point HIGHER than my original strike price. Whoo-hoo! Now my options were actually worth something again. This morning I looked again, and lo-and-behold, the share price is now 12 points above the strike price, making my options worth about $7,200.
Now the dilemma ...
Do I exercise and sell the options and walk away with a decent profit, or do I do nothing and hope they continue to go up? I guess that's the question almost every investor asks themselves - WHEN to get out of an investment. I'm not too savvy when it comes to the stock market, I embarrassingly admit, but I have an uneasy feeling this current run-up in the market may just be an anomaly. The company I work for is a big Fortune 100 IT product & services corporation that had an excellent 1H and particularly strong 2Q this year.
My initial thought is to do this ... Keep tabs on the share price (of course). If it plateaus (IOW, if it starts to go down), make note of the highest price and subtract $5 - that will be my exit price. If it continues to go up, I'll just continue to keep tabs on it. Of course, the price could tank >$5 in one day, meaning I'd take a heavier loss than expected, but that's a chance I'd have to take.
What I'd like to do is use the $$$ as a downpayment and closing costs for the 4-plex out-of-state. It's debatable if the ROI would be infinite or not as the money could be looked as earned or unearned, depending who's looking. Either way, it would be money I wasn't expecting at this time.
Patent
Another unexpected stream of income came by way of a patent I submitted about four years ago via my company. They strongly encourage submitting patent ideas here (which, boosts their IP portfolio), and if they accept your idea, you get a nice plaque and some money ($500). Then the idea gets formally submitted to the U.S. Patent & Trademark Office for their scrutiny. That's where it takes so darn long. If they don't accept your idea, then that's as far as it goes (you still get to keep the plaque and money the company gave you, though). But if the USPTO accepts your idea then you get a nicer plaque AND an additional $500.
I found out earlier this week they FINALLY accepted my idea, so I should be getting another $500 soemtime soon (probably in my next paycheck). Of course, using Kiyosaki's income model, by the time I actually see ANY of the money, it will only be half ($250). :-(
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2 comments:
I'd cash out stock options from your employers as soon as you are able to. You already have enough reliance on your employer in that they provide you with most of your income.
Do you really need to have additional dependance on them for your investment portfolio?
Also, keep in mind that stock options can lead to some nasty AMT tax consequences if you exercize the options but don't sell for a while.
Yeah. And looking at the market the last couple of days doesn't give me any confidence that the upward trend will continue. I may just go ahead and cash-out before it falls any further.
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