Need advice on Option Selling and Tax Implication

[sundancegt]

Hi everyone

I'm a first time poster, but plan have been lurking as a guest for awhile and really appreciatte the advice and openess of people that are willing to chime in with opinions.

I have about $130K worth of company stock options. These are the regular kind (sorry, can't remember the exact name) that get taxed normally, no deferment possible.

I've been planning on taking a 30% hit on the sale whenever I did sell. The stock is today at a 6 month high, the markets are in flux, and I would really like to get it out of the stock since my 401k, Salary, stock purchase plan are already tied up in my company. Over 50% of my investments are tied up in this one company. I think it is time to diversify. Plus, I'm starting a business that could use the additional funds so as to keep the debt amount down.

Can anyone (with the limited amount of information provided) think of a reason NOT to go ahead with exercising these options??

Thanks so much..

SGT

[tripods68]

You have a very high concentrations of money into one company. Much like ENron you wouldn't put all your eggs in one basket. Having said that, I would say you should NOT OWN more than 10% of your company stocks. I would rather see you sell as much as you can now and put the rest into a balance diversified portfolio. IMO.

[sweeps]

Yes, you need to diversify yourself away from your company, but I wouldn't do it all at once. You'll really kick yourself if you sell everything at a bottom. Also by selling in chunks you could spread out your tax bill over 2 or 3 years.

[jIM_Ohio]

Consult a tax accountant and verify the options will not subject you to AMT.