When should I sell my company options?

[KTP]

I have 6000 options of microsoft at a strike price of $20 and another 6000 at a strike price of $25. Both expire in June 2012.

Obviously I should have sold them while ago when microsoft was at ~35ish, but oh well. I think there is a chance at least the $20 options will come out from under water over the next 3 years (actually they did briefly the past 2 days).

What would you do?

[conancare]

Hi KTP,
If i would be there in your place, i would wait for long, as market position is becoming better. I am sure by due course the strike price will retain it's original price or may be more then that.

Regards
Conan

[kork13]

Agreed... Just hold onto all of your options (both strike prices). Give it time and Microsoft will almost assuredly move back up. It's a strong company with a huge majority of the market on computers, OS software, and it also has its gaming consoles (xbox). Just sit tight and give it time, then once the share price has come up to something you're happy with, go ahead and execute them. You've got 3 years to wait, and I think you'd be selling yourself short not to wait at least until the share price has picked back up again. Look again in a year or so and re-evaluate.

[Broken Arrow]

I'll third the recommendation.

Microsoft as a company isn't exactly performing lately, regardless of product line and/or market conditions. So, it'd be a shame to sell right now.

However, I believe there is potential in the Windows 7 project. Initial reports of leaked builds were actually kind of positive, or at least not negative like it was with Vista. So, I think there's enough upside to sit and wait.

[swanson719]

Wait it out for a while. Never know - maybe MS will hit $100 a share again 3 or 4 years from now.

[conancare]

Hi swanson,
You spoke the right thing, that's what i was suggesting to KTP. Keeping patience will certainly bring best results in future. So currently selling units will be nothing except gaining loss.

Regards.
Conan

[KTP]

Well, obviously I am not going to sell them at $0.50 over strike or anything, unless it doesn't hit that until May 2012

The big decision is should I sell them if the stock jumps to $30 or something when windows 7 releases or there is other big positive news. Having company options is like being in the stock market short term...not really a great way to invest, but these were forced on us. Now we get stock grants, which at least don't have an expiration since they are real stock.

What would you do? Establish a price point to sell or establish a date to sell? Ie, should I sell some or all at any time when the stock is above X, or should I say I am going to sell half in 2011 and the rest in 2012?

[Slug]

Choose a price point. Set it and forget it. Then be thankful when the check comes. That's if you have no immediate need for the capital.

[swanson719]

I would do both. Set a price point of X, and a date that it has to reach it by. If it doesn't reach it by that date, you sell then and hope for the best. If they expire in May 2012, then I would hold onto them until May 2012 unless the stock spikes with Windows 7 and hits your set price point.

[KTP]

I have been thinking along the same lines. The only issue I have is having all my eggs in one basket. I have a few thousand shares of actual microsoft stock from the grant program, the options, and of course I work at microsoft. I was holding onto the grant shares for 18 months for capital gains reasons, but that is a joke. Their cost basis is $27, and the stock is currently $20-$21. Even though it hasn't been 18 months I could sell them and book a loss (would have way more of a loss than I could deduct though).

Whatever I do, I will let you know when I sell the shares or options as the stock always goes up the week following when I sell.

[Broken Arrow]

Whatever I do, I will let you know when I sell the shares or options as the stock always goes up the week following when I sell.

I had to chuckle at that because it seems that I have the exact same problem.

[conancare]

Hi KTP,
Because, currently there is no chance or very rarely the position of stock market could improve. So to Establish a price point to sell depends on your timing quality and your fortune as well. I will prefer "establish a date to sell "

Regards
Conancare
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