Transition
VOLT™ Diversify Now
Diversify now. Sell later, on the client’s own schedule.
A floor on the position, then cash drawn against that floor — sized to the after-tax floor rather than the dealer’s 80–90%. The client diversifies today; the sale, and its tax, happen on their timetable. A prepaid forward pays more cash today; we say so.
Illustrative example
$17M position → ~$10M of liquidity, protection intact
Drawn from a priced proposal, not an engagement. Indicative as of its run date.
The problem
A client who wants to be diversified but will not trigger the tax usually gets pushed toward a margin line sized off gross market value. That number looks generous until the position falls and the call arrives — which is exactly when the diversified portfolio has to be sold to defend the concentrated one. The liquidity was never sized to what the client would actually keep after tax.
How it works
Floor the position first
A protective collar goes on before any borrowing. The floor is what makes the loan safe to carry, so it is not an add-on.
Size the loan to the after-tax floor
Advance rate is set against what the client would net at the floor, not the 80–90% of gross a dealer will quote. Smaller line, materially lower call risk.
Diversify with the proceeds
The cash goes to work in a diversified portfolio now, while the concentrated position stays floored and the decision to sell it stays the client’s.
What’s inside
Protective collar
The floor-and-ceiling structure the loan is secured against.
Sized credit facility
Liquidity drawn against the after-tax floor.
Alternative comparison
A prepaid forward priced alongside it, so the advisor sees both numbers.
Who it’s for
- Clients who want to be diversified without realizing the gain today.
- Advisors uneasy about a margin line sized off gross market value.
- Situations where a tax event now would cost more than the financing.
Common questions
Why borrow less than the dealer offers?
Because the dealer’s 80–90% is sized off gross market value, not off what the client keeps at the floor. Sizing to the after-tax floor is what keeps a market decline from becoming a margin call.
Is YAM the lender?
No. YAM manages the mandate and helps the client access and manage liquidity. Terms depend on the custodian, and liquidity strategies involve margin and financing risk.
When is a prepaid forward the better answer?
When maximizing cash today matters more than keeping the position and the upside. It generally pays more up front. We price both and show the difference.
How is this different from box-spread borrowing?
This structure floors one concentrated position and lends against that floor, so the client can diversify without selling. Box-spread borrowing raises cash against the portfolio’s existing margin capacity and hedges nothing. Different collateral, different purpose.
Request a proposal on VOLT™ Diversify Now.
Position-specific analysis and an executable proposal in days. For investment advisers — your client, your custodian, your portfolio.
Partner with us →Also in Transition
VOLT™ Accelerate
Transition
Exit the position tax-aware, on a schedule.
VOLT™ Proxy EFR™
Transition
Diversify when issuer policy bars hedging the stock itself.
Elsewhere in the suite
Tax-Aware Equity Strategies
Protect & Monetize
Keep the position and the grants. Put the option book to work, tax-aware.
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.