Company stock options

CoffeeIcePapers

CoffeeIcePapers

Well-Hung Member
My company will match up to $500 if I buy company stock. The problem is that the stock is a dog and doesn't look to be recovering anytime soon. From what I understand, their match is taxed, so I don't think there is much incentive to invest. Thoughts?
 
As @SrFnFly227 point out, it can be a good deal...as long as you don't have to hold it for too long. We had a deal at AirTran where they company would match some percentage (can't remember the details). You only had to hold the stock for a year, so you could sell then and pocket the company's match. Of course, that was a relatively stable company that made profits even through the downturn. If we're talking about a company on the edge of bankruptcy like RJET, I'd run the other direction.
 
Look at the 52 week high/low spread on any stock, even "stable" companies like GE, Boeing, SWA, Bank of America, etc. If you have to hold for a year, you may or may not get lucky even with their match.
 
SrFnFly227 said:
How long do you have to hold it? If there are no limits, buy $500, have them match you, and then sell all $1000. You just made $500 :D
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I believe it's 2 years.
ZVfAVpY.jpg


Like I said, it doesn't appear to be a good buy.
ZVfAVpY.jpg
 
Find out how long they require you to keep your position. Do a little math. The most efficient position and least risky is to stop buying when they no longer will match you, obviously (i.e. have the minimum amount of company stock to get the $500.)

It sounds like a good deal to me if its something along the lines of 'Keep shares for 1 year, or pay the $500 back' but take a look at the historical price variance over the past 5 years. You could lose half your value and still break even, not often you can say that.
 
mojo6911 said:
My company will match up to $500 if I buy company stock. The problem is that the stock is a dog and doesn't look to be recovering anytime soon. From what I understand, their match is taxed, so I don't think there is much incentive to invest. Thoughts?
Click to expand...

Buy a put to cover the position you have in the stock however long you need to hold it. FYI - having the put will mean that the IRS won't let you be taxed as a long term capital gain on the appreciation. But since appreciation is unlikely, I'd just take the free money and be happy to pay the tax man.

EDIT: Your employment contract with your employer may prohibit you from holding a short position in their stock. Of course, it probably does not say that your mom can't short their stock, or you could just not tell them.
 
mojo6911 said:
I believe it's 2 years.
ZVfAVpY.jpg


Like I said, it doesn't appear to be a good buy.
ZVfAVpY.jpg
Click to expand...
I don't know what company you work for but it might be.

Keep in mind, the overall market has been down similar to that chart.

My wife has worked for two different companies where she has been given stock options. One company she left over two years ago and we still have the stock as awarded with no intention of selling, the other we never even accepted the options.

The difference between the two? The former was an incredibly well run company with top talent. They spun off her division which was sold, she quit and went to the second job. The second place is run by amateurs in comparison, all the talent uses it as a stepping stone to GTFO. My wife is gone in less than two weeks, after job searching since Jan 2015. Their pay is low and they got lucky hiring a bunch of people when the economy was bad, but now people are bailing. Their stock is down about 67% over the past year...

Knowing what I do about the companies, it's easy to see why company A's stock price has soared while company B's has tanked. Only you know how well run your company is. If it's got great people there and the company makes a good product, just down on their luck now with the general market, it could be a great buy. The opposite is also true.
 
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