Stock Options and Wealth

Written by The Dividend Guy on October 5, 2006

I am not going to lie to you, I am really hoping the high number of stock options I hold with my employer really pays off. I believe that anyone who holds stock options feels the same way. However, this week has been especially tough for those of us in the oil and gas business who hold stock options. I work for a large company - I imagine it was much tougher for those individuals in the juniors who were watching oil and natural gas tank and the shares of their companies with it.

But then I got to thinking that I shouldn’t really be worrying about it right now. I won’t be fully vested for another 2 .5 years. In addition, I stand to receive another grant in the spring of ‘07 so the lower the price is then, the cheaper my options will be priced and the more value I can hope to earn from them. Also, I buy shares through a share purchase plan every month and don’t plan on selling anytime soon (I will sell some when my company position becomes 5 - 7% of my portfolio). The lower the price they are the more shares I can accumulate. If you believe some of the news reports out there then this is the beginning of an extended retreat in energy stock prices - but I have written about being cautious with the media before.

What do I plan to do? (1) Hope that as my options start to vest I will realize some good money out of them but not banking on them in any concrete fashion - they have no cost to me from a cash perspective so in effect I don’t really lose anything if they don’t go anywhere, and (2) Monitor my stock holdings through the share purchase plan and ensure that it does not become too big a chunk of my portfolio - as the shares appreciate over time I will trim back my holdings to diversify myself into other areas (i.e. dividend growth stocks).


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1 Comment so far

  1. finance girl October 9, 2006 8:56 pm

    stock options are a huge incentive for me, and I hope you have good luck with yours. Me, not so good luck. I had MSFT stock options as an employee from 2000-2006, including some stock options that had been with a company (know Visio?)purchased by MSFT in Jan 2000 that got converted wholesale over to MSFT.

    I had to put on scuba gear to see most of those options, if you know what I mean.

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