Comments on: How to Profit from Employee Stock Options Regardless of Share Performance http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/ Financial Evolution: Education, Adaptation, Achievement Wed, 10 Mar 2010 20:24:33 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Mike http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-3286 Mike Tue, 01 Dec 2009 21:33:52 +0000 http://www.darwinsfinance.com/?p=281#comment-3286 you can do this and we do it as a good part of our team's business. It operates with the same logic as a 10b5-1 plan. michael.j.jappell@smithbarney.com you can do this and we do it as a good part of our team’s business. It operates with the same logic as a 10b5-1 plan. michael.j.jappell@smithbarney.com

]]> By: Darwin http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-1539 Darwin Thu, 20 Aug 2009 02:37:08 +0000 http://www.darwinsfinance.com/?p=281#comment-1539 Hi Frank, TradeKing's good; not sure if you caught my note in other posts - anyone that wants a free $50 for signing up with the best anyway can get the bonus through August by doing the following: You just need to deposit $1000 and execute a trade by August 27. It’s that simple (free $50 plus the best rate on trades!).and you want to partake in the $50 Tradeking bonus through August * Contact me using the contact form at the top of this page, * Make sure to put your email in there * You’ll get an email from Tradeking with a link to activate! It’s that simple! On the company issue, yes, varies company by company - mine was silent on the topic, so I figure no policy against. If in doubt, check it out! Hi Frank,
TradeKing’s good; not sure if you caught my note in other posts – anyone that wants a free $50 for signing up with the best anyway can get the bonus through August by doing the following:

You just need to deposit $1000 and execute a trade by August 27. It’s that simple (free $50 plus the best rate on trades!).and you want to partake in the $50 Tradeking bonus through August

* Contact me using the contact form at the top of this page,
* Make sure to put your email in there
* You’ll get an email from Tradeking with a link to activate!

It’s that simple!
On the company issue, yes, varies company by company – mine was silent on the topic, so I figure no policy against. If in doubt, check it out!

]]> By: Frank http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-1536 Frank Wed, 19 Aug 2009 20:02:16 +0000 http://www.darwinsfinance.com/?p=281#comment-1536 Hi, I just found out that there is an item in my company's insider trading policy that prohibits an employee doing short sell of company stock. Covered call is not viewed as short sell but uncovered call is. So if anyone want to do option against your company's stock option, you need to check you company's policy first, if you don't want to get into trouble. Hi,
I just found out that there is an item in my company’s insider trading policy that prohibits an employee doing short sell of company stock. Covered call is not viewed as short sell but uncovered call is. So if anyone want to do option against your company’s stock option, you need to check you company’s policy first, if you don’t want to get into trouble.

]]> By: Frank http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-1529 Frank Tue, 18 Aug 2009 17:47:31 +0000 http://www.darwinsfinance.com/?p=281#comment-1529 Hi, Darwin: I opened a TradeKing account based on your suggesting. Even it is only a few days, I feel their customer service is really great and everything are handled perfectly, as far as I can tell. BTW I am usually a picky person. Let's see how well they handle my tradings in the future. One issue I have is that since I don't have much option trading experience, I am not qualified to do naked calls. Someone suggested that i can do a spread by write a call equivalent to the naked call I want to do and then buy a call at higher price to cover it. If the second call is much higher, it will not cost much. Spreads requires lower option trading level then naked calls because they involve less risk. Do you think this will work? Thanks again for your good suggestions that led me to start this effort. Sincerely Frank Hi, Darwin:
I opened a TradeKing account based on your suggesting. Even it is only a few days, I feel their customer service is really great and everything are handled perfectly, as far as I can tell. BTW I am usually a picky person. Let’s see how well they handle my tradings in the future.
One issue I have is that since I don’t have much option trading experience, I am not qualified to do naked calls. Someone suggested that i can do a spread by write a call equivalent to the naked call I want to do and then buy a call at higher price to cover it. If the second call is much higher, it will not cost much. Spreads requires lower option trading level then naked calls because they involve less risk. Do you think this will work? Thanks again for your good suggestions that led me to start this effort.
Sincerely
Frank

]]> By: Darwin http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-1454 Darwin Tue, 11 Aug 2009 12:45:17 +0000 http://www.darwinsfinance.com/?p=281#comment-1454 Hi Frank, Given the long durations involved in such activities, I didn't view it as high risk. I have one trading account, and then my employee options are held in some other account that the company established, Citi or SmithBarney or something. Anyway, if you want to avoid any volatility that may occur in a single day (which will likely be small if your horizon was say 1 year out - i.e. a stock may move 25% in a year up or down, but may move 1-2% in a day), you could always just have two browser windows open, execute the trades around the same time and you're just about net even on exercise price. If your company only exercises options based on the price at close of trading, you could close the options transaction right at 3:59PM. So, a few options out there to mitigate the timing risk. Hope that helps! Hi Frank,
Given the long durations involved in such activities, I didn’t view it as high risk. I have one trading account, and then my employee options are held in some other account that the company established, Citi or SmithBarney or something. Anyway, if you want to avoid any volatility that may occur in a single day (which will likely be small if your horizon was say 1 year out – i.e. a stock may move 25% in a year up or down, but may move 1-2% in a day), you could always just have two browser windows open, execute the trades around the same time and you’re just about net even on exercise price. If your company only exercises options based on the price at close of trading, you could close the options transaction right at 3:59PM. So, a few options out there to mitigate the timing risk. Hope that helps!

]]> By: Frank http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-1452 Frank Tue, 11 Aug 2009 04:15:47 +0000 http://www.darwinsfinance.com/?p=281#comment-1452 Darwin: Thank you for your quick reply. What you said makes sense. The only issue I can see is that there is no way to link the filling of the naked call with the exercise of the employee stock option, since the blockage, say Ameritrade, handles the naked call will not be able to sell the employee stock option which is held at another blockage, say Etrade. Of course, it is only slight increase in risk factor but nevertheless not perfect. Moreover, I am work full time so may not be able to do these trades in real time. I don't have much experience in option trading and my allowed option trading level is low right now. I need to find out how to increase my trading level first. Thanks for your help anyway. Frank Darwin:
Thank you for your quick reply. What you said makes sense. The only issue I can see is that there is no way to link the filling of the naked call with the exercise of the employee stock option, since the blockage, say Ameritrade, handles the naked call will not be able to sell the employee stock option which is held at another blockage, say Etrade. Of course, it is only slight increase in risk factor but nevertheless not perfect. Moreover, I am work full time so may not be able to do these trades in real time.
I don’t have much experience in option trading and my allowed option trading level is low right now. I need to find out how to increase my trading level first.
Thanks for your help anyway.
Frank

]]> By: Darwin http://www.darwinsfinance.com/how-to-profit-from-employee-stock-options-regardless-of-share-performance/comment-page-1/#comment-1403 Darwin Sat, 08 Aug 2009 03:24:49 +0000 http://www.darwinsfinance.com/?p=281#comment-1403 Here's the deal (since I've been able to do this through Ameritrade myself) - I don't think the brokerage even needs to know whether you're holding company stock on the other end. This is essentially a "naked call" selling exercise. For all Ameritrade or whoever knows, you do or don't have some long options elsewhere in your holdings. What you'll need is margin and the higher level of options allowances that allows you to short stocks, sell "uncovered" or "naked" calls/puts, etc., and with that in hand, as long as you have adequate capital in your account (which can just be investing in long positions elsewhere, cash or whatever), you should be able to do it. Now, I can't speak for which brokerages allow individual investors this level of leeway and which don't. I did just sign up for Tradeking ($50 bonus <a href="http://www.darwinsfinance.com/high-yield-large-cap-dividend/" rel="nofollow"> here</a> too!) but my old account with Ameritrade currently has multiple "naked" short positions - they're hedged with other instruments of course, but I don't hold the underlying instrument long. I think if you either a) phrase the question more like "with the right approvals and capital, can I sell options without the underlying securities" or b) just use Ameritrade, it should be doable. Hope that helps; please come back and update on your findings so other readers can see what their options are (no pun intended) and whether other online brokers allow like Ameritrade (since they're a bit on the expensive side these days). Here’s the deal (since I’ve been able to do this through Ameritrade myself) – I don’t think the brokerage even needs to know whether you’re holding company stock on the other end. This is essentially a “naked call” selling exercise. For all Ameritrade or whoever knows, you do or don’t have some long options elsewhere in your holdings. What you’ll need is margin and the higher level of options allowances that allows you to short stocks, sell “uncovered” or “naked” calls/puts, etc., and with that in hand, as long as you have adequate capital in your account (which can just be investing in long positions elsewhere, cash or whatever), you should be able to do it. Now, I can’t speak for which brokerages allow individual investors this level of leeway and which don’t. I did just sign up for Tradeking ($50 bonus here too!) but my old account with Ameritrade currently has multiple “naked” short positions – they’re hedged with other instruments of course, but I don’t hold the underlying instrument long. I think if you either a) phrase the question more like “with the right approvals and capital, can I sell options without the underlying securities” or b) just use Ameritrade, it should be doable.

Hope that helps; please come back and update on your findings so other readers can see what their options are (no pun intended) and whether other online brokers allow like Ameritrade (since they’re a bit on the expensive side these days).

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