What would you say to someone who had the opportunity to purchase their company stock at a 15% discount?
I’d say go for it and diverisfy! But I didn’t work through Enron/Worldcom.
How long do you have to hold it?
I’ll ask them. I’m sure it’s a 12-18 month window.
I’d ask myself, is this something that looks appealing enough to buy without the discount. If yes, I’d go for it. Hopefully it does well and you get a 15% discount to boot.
You may even be able to arb it, depending on the option cost, with a 1 year hold and 15% discount. I disagree with owning the stock of your employer or even your industry to some extent. If I didn’t work at my firm, I’d have a large position there, but I dont believe in doubling down on my exposure. Plus I’m always worried about transacting with some material inside info. Not that I ever would intentionally, but I generally know non market stuff so when could I ever trade. Huge liquidity penalty.
My father’s new company apparently is allowed to buy stock at a 15% discount and sell it the next day. At least this is what his new boss was telling him. I said it sounded strange to me, but I’m not very familiar with these plans. I expected some sort of lock up period
Mine is like what rawraw says. So I max my contributions, get the stock, and try to sell it as quickly as I can. Last quarter I didn’t make the trade quick enough and my company’s stock dropped a bunch, so I’ve been holding it all quarter.
I’m not sure how wash sales work with these things. For instance, suppose I sell the shares I have now at a loss at the end of the quarter, then the stock purchase plan will buy new shares to replace them (which I would prefer to also sell immediately, but would be willing to wait for tax reasons). Would that not be allowed under wash sale rules?
generally not a good idea.
My firm offers a 15% discount. I max the contribution, sell the entire position less the 15% discount. I view it as a free investment.
my firms offers a 15% discount but i have hesitated to partake. combining the 43% tax and 3% both ways currency conversion, and the 3.8% borrow rate, the discount is closer to 2%. pretty crap deal for my situation considering there is a 12 month lock-up.
Here, employee stock has a lock-up period of five years and can be subject to special tax (non-cash benefits). I always refused it…
^ Five years? Holy crap. Our incentive stock grants aren’t even locked up that long. Crazy Germans and their long term focus.
^I blame the unions.
at 15% discount. you should take advantage. buy a put with immediate protection, prolly cost 10% if u buy a year long.
If its longer, it depends on the stock. if the stock is good, get it, if not then dont.
when do you get to purchase the stock is it anytime or during certain time frames?
^Mine works that it takes a little bit of money from each paycheck and then it makes a purchase at the lower of either the beginning of the quarter or the end of the quarter price. It typically shows up in my account a few days after the end of the quarter.
^can you legally arbitrage this?
^The return per quarter is 15% plus the % price change during the quarter (if the stock went up) plus price changes from the end of the quarter to when I sell it. The only risk is that last piece, which is usually small (in both % and dollar value). I suppose I could short an amount of company stock on the last day of the quarter that might equal the value of what I would buy and then close them out at the same time. Not sure it would be worth it, but if the dollar value were large enough it might make sense.