Hedging my share awards

cjt105

Hello,

I work for a NASDAQ-listed company, and a significant part of my salary is in shares. I'm planning to use the shares which I'm entitled to to build up a decent sized deposit for a house. The stock itself is horribly volatile - in the past twelve months it has increased and decreased by 25% three times. :eek:

It's now heading towards a peak, but my next tranche of shares aren't released for another six months. I'd like to somehow lock in or hedge the share price at the current level. What's the best way to do this?

oldtoolie

The best way to lock in profit is to sell when the share is high. If it was me, I would not hold any more of that share than I would want to own if I did not work for that company. What else are you invested in? Make sure you are balanced and diversified. Many people have been caught out by holding their savings in the company shares: company goes bust = no job & worthless shares.

atush

Sell some of your previous tranche now if they price is right. The othres will have to wait until they are transferred to you.

I agree that you should not hold too much of your personal weath in your company's shares.

barrooo

If your shares are anything like mine, although you get to purchase at a discount, you need to hold them for a certain period of time, e.g. three years.
One possible option is to use contracts for difference to hedge at the purchase price, but you will pay a financing rate for these.

The other may be to use covered warrants, but with both of these methods, I would research thoughly whether they will allow you to achieve what you want, as both carry a high degree of risk