Protect & Monetize
Tax-Aware Strategies for Employee Stock Options & Concentrated Stock
Keep the position and the grants. Put the option book to work, tax-aware.
Two tracks under one mandate: income from vested employee options using engineered collateral, and a floor-and-ceiling structure on concentrated stock at zero net option premium — transaction costs and advisory fees separate and disclosed.
Illustrative example
vested grants → recurring income without exercising; $244M concentrated position → floored ~10% below market, at a small net credit
Drawn from a priced proposal, not an engagement. Indicative as of its run date.
The problem
A vested option grant and a low-basis share position have the same defect. The value is real, the risk sits in one company, and the obvious move triggers tax. Exercising converts a leveraged claim into stock and a bill. Selling realizes decades of gain at once. Buying protection outright costs premium every year, and most clients will not fund a hedge indefinitely. So the largest line on the balance sheet stays unmanaged.
How it works
Establish what is permitted
Employee stock options are issuer-governed, and concentrated holders often sit under an insider policy. What the plan documents and the policy actually permit is read and recorded before anything is priced.
Protect the shares
On concentrated stock, a put sets the floor the client cares about and a call above the market funds it. The option package carries no net premium, and the ceiling is set deliberately against how much upside the client wants to keep.
Monetize the grants
On vested employee options, a separate engineered collateral position supports the option book. Written options produce recurring income while the grants stay unexercised and the client stays out of a taxable exercise.
What’s inside
Plan-terms and policy review
What the grant documents and the issuer policy permit, established first.
Long put / short call
The protective leg that defines the floor, and the financing leg that pays for it and sets the ceiling.
Engineered collateral
The supporting position that carries the option book where the grants themselves cannot.
Continuous management
Rolls, monetization and maturity decisions after day one, recorded and reported.
Who it’s for
- Advisors whose client will not sell but cannot carry the full drawdown.
- Long-tenured employees and executives with large vested option grants.
- Founders holding a single low-basis position through a blackout or a policy.
- Clients who want protection without an ongoing premium bill.
Common questions
Does "zero cost" mean it is free?
No. It means the premium collected on the call offsets the premium paid for the put, so the option package itself carries no net cost. Transaction costs and advisory fees are separate and disclosed.
What does the client give up on the shares?
Upside above the ceiling. That is the trade: the call that funds the floor also caps participation, so the ceiling is set against how much upside the client wants to keep.
Can the floor be set anywhere?
The floor, the ceiling and the tenor move together. A higher floor costs more, which means a lower ceiling to fund it. We price the combinations and show the trade rather than defaulting to one shape.
Does this exercise the options?
No. The program is built so the grants stay unexercised. That is the point — exercising would create a tax event and convert the leveraged claim into stock.
Will every plan allow the option program?
No. Employee stock options are issuer-governed and monetization is subject to plan terms. If the plan does not permit it, we say so rather than working around it.
Is this one strategy or two?
One mandate, two tracks. Most clients need one of them. Some need both, because the grants and the shares are the same concentration risk in two different wrappers.
Request a proposal on tax-aware equity strategies.
Position-specific analysis and an executable proposal in days. For investment advisers — your client, your custodian, your portfolio.
Partner with us →Elsewhere in the suite
VOLT™ Accelerate
Transition
Exit the position tax-aware, on a schedule.
VOLT™ Diversify Now
Transition
Diversify now. Sell later, on the client’s own schedule.
VOLT™ Proxy EFR™
Transition
Diversify when issuer policy bars hedging the stock itself.
Box-Spread Borrowing
Financing
Borrow against portfolio margin capacity — managed so it does not become a margin problem.
Keep reading
Yayati Asset Management, LLC is a state-registered investment adviser. This material is for investment advisers only; it is illustrative, not an offer, and not tax or legal advice. Examples are drawn from priced proposals, not engagements; figures are indicative as of their run dates and tax outcomes are client-specific. Options involve substantial risk and are not suitable for all investors — read “Characteristics and Risks of Standardized Options.” “Zero cost” means zero net option premium; transaction costs and advisory fees are separate and disclosed. Hedges on correlated funds carry basis risk: fund and stock can diverge. Employee stock options are issuer-governed; monetization is subject to plan terms. Liquidity strategies involve margin and financing risk, and terms depend on the custodian. PLASMA™ is an investment technology platform operated by Yayati LLC; it is not an investment adviser.