Stock Options and Concentrated Holdings
The Many Risks of Concentration
If your wealth is concentrated in one or only a few stocks, you may be exposed to unnecessary market risks, including volatility and illiquidity. Concentrations can easily arise - through inheritance, employment with a single company, the accumulation of stock options, or the sale of a business for stock - but it’s unwise to let them linger.
Repositioning portfolios with concentrated positions must be done strategically, because outright sale can trigger significant tax liabilities. Each strategy must be personalized, tailored to your specific risk tolerance, overall financial goals, tax situation, and time horizon. With stock option strategies, particular consideration must be given to tax consequences, including the Alternative Minimum Tax (AMT), as well as any regulatory restrictions.
Our Wide Range of Techniques
City National’s seasoned professionals are accustomed to developing and implementing strategies for concentrated portfolios to:
- better manage your risk
- respect your investment preferences
- preserve your original portfolio objectives
- factor in your tax and estate planning
We are comfortable collaborating with your existing tax and investment advisors, in exploring proven techniques including hedging, charitable trusts, principal protection, scheduled diversification, and market-neutral strategies.
City National understands that wealth is difficult to accumulate – and to retain. If your wealth is concentrated, learning more about our strategies is highly recommended.
- Are Not insured by the FDIC or any other federal government agency
- Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
- May Lose Value