A deliberate and thoughtful stock options strategy can maximize your wealth by harnessing the power of a significant part of your compensation. Without the guidance of an experienced financial advisor, well-intentioned company stock option recipients are often left on their own to set options targets (triggers for exercising an option). We find that “do-it-yourself” targets are frequently based on one of the following approaches:
- Participate in water cooler talk about how stock prices will fluctuate during the year, then exercise at that price target
- Exercise options as soon as they vest
- Set a target to exercise at x% above the strike price and wait for that price
- Hold on until the options are about to expire in an attempt to avoid the regret of exercising too early
SYM’s Approach to Stock Options Strategy
- Develop a true understanding of how much of your wealth may reasonably remain at risk with options
- Analyze the stock and option characteristics to form price targets based on SYM’s proprietary, time-tested research
- Recommend a customized strategy for exercising or holding options to seek future upside
- Implement and execute the plan with rigor and discipline to ensure action is taken
Maximizing Your Financial Capital
There comes a point in life when your money should be working harder than you do. Let the SYM team guide you through a wide-angle approach to your equity compensation.
![A graph showcasing expected financial capital, human capital, and total wealth over the life cycle with optimal asset allocation, including stock options. The x-axis represents age (20 to 65) and the y-axis represents U.S. dollars (thousands). Total wealth increases as financial capital grows and human capital decreases over time.](https://www.sym.com/wp-content/uploads/2022/02/maximizing-your-financial-capital.png)
Diversification
Diversification is critical, and de-risking a highly concentrated position in the stock of your employer requires care and attention. Without a thoughtful plan for diversification, single stock risk can sidetrack or diminish an individual’s overall net worth trajectory.
![A table highlights key statistics about the Russell 3000 stocks' volatility and performance: 99% exceeded the index's volatility, 31% lost over 30% in a year at least once, 8% faced permanent impairment, and 22% were more than three times as volatile as the index—underscoring the risks often associated with stock options.](https://www.sym.com/wp-content/uploads/2020/09/stock-option-russell-1000-diversification-chart.png)
Risk vs. Reward
At SYM, wealth management isn’t “one size fits all.” When establishing exercise targets, your SYM advisory team creates a customized approach that takes into account your risk profile, the impact on your total net worth, the aggressiveness of your overall portfolio, and the economic significance of the payoff at-risk. Want to learn more? Connect with a SYM advisor at www.sym.com.