Author Topic: ESPP with holding period  (Read 1373 times)

Bourbon

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ESPP with holding period
« on: November 09, 2016, 12:32:18 PM »
Our company has only been listed for about 1.5 years.  We just got offered an ESPP, which offers stock at a 10% discount off the price on the day of purchase, twice a year.

My initial thought is to sign up and take the money, but it also has a 90 day holding requirement.  Stock has been stable/up since IPO, but also not necessarily a blue chip.  Is the discounted ESPP always a no brainer if you churn ASAP?

seattlecyclone

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Re: ESPP with holding period
« Reply #1 on: November 10, 2016, 02:29:54 PM »
A 90-day holding period is riskier than a 0-day holding period, but the odds are still in your favor. You'll win some and lose some compared to just investing your money in VTSAX, but since you're starting out 10% ahead you should expect to win more often in the long run.

CoffeeToaster

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Re: ESPP with holding period
« Reply #2 on: November 10, 2016, 08:29:36 PM »
Can you sell covered calls against the stock when it comes in to lock in some amount of profit even if the stocks drop after 90 days?

triangle

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Re: ESPP with holding period
« Reply #3 on: November 10, 2016, 09:00:39 PM »
Unless your company relies on a single product, or is in a super cyclical market, etc which creates extra company specific volatility then participating seems wise. Especially if the 10% discount is not applied to the closing price when purchased but based on some other formula which might mean a greater than a 10% discount.