NQO's

[felizcortez]

I have about $100k of Non Qualified Stock Options that vested this year that are in the money (the gain would be $100k).  The option value is good for 10 years.  The 100k is before taxes so a good chunk of that amount would get taxed if I sold. 

I already sold the RSU's that vested with the award since I view that's as essentially a cash bonus.  However, I'm going back and forth on whether I should hold onto the options since there is value in the time of the option or whether I should just cash them in and invest in an index fund.

Any thoughts?

[Financial.Velociraptor]

How much of your stache is 100k?  You don't want to end up like the Enron "millionaires" who had everything in Enron stock in their retirement plans and then got kneecapped.  Basically, diversification is a salient point here.

[felizcortez]

It represents about 5% of the Stache.  So it's not a huge percentage. 

[uwp]

Is the value $100,000 because you have a lot of options, or because the stock has risen?

As in:
You have 10,000 options and the stock is at $100/share while the strike is $90?
Or do you have 100 options and the stock is at $1,100/share while the strike is $100.

Basically, if we had a recession and the stock dropped 20% would you lose everything (scenario #1) or just lose some?

That might change how I chose to go forward. 

Also: high tax bracket this year?  And next year?  Will you get new grants in the future?

The standard answer around here is to just sell and take the money.  It's probably the safest option.  Would you buy $100k worth of options in the company right now?  Probably not.

[felizcortez]

The stock has risen and the options vest 25% a year so this 100k is a combination of 4 separate grant years. 

Current Stock Price is ~$110 which is an all time high for the stock and a large piece of this is due to solid company performance/stock gains.  Next year we will be in a lower tax bracket as we are planning to take a sabbatical, but another roughly equal size chunk will vest next year as well.

Grant Date 2014
Grant Price 44.09
Value: ~$36k

Grant Date 2015
Grant Price 53.94
Value: ~$26k

Grant Date 2016
Grant Price 52.93
Value: ~$25k

Grand Date 2017
Grant Price $79.26
Value: ~$9k

[uwp]

The stock has risen and the options vest 25% a year so this 100k is a combination of 4 separate grant years. 

Current Stock Price is ~$110 which is an all time high for the stock and a large piece of this is due to solid company performance/stock gains.  Next year we will be in a lower tax bracket as we are planning to take a sabbatical, but another roughly equal size chunk will vest next year as well.

There's no sure-fire right answer. 

But I personally would sell the 2014, 2015, and 2016 grants, and let the other one ride until next January and sell those in the new tax year.  Then, if the stock drops, you can pat yourself on the back for selling 90% of what you had, and if it goes way up, you can be happy you held on to the 2017s and you have more grants coming.