Are there innovative ‘hedge’ products available for higher net worth investors who have large positions in stock?
Two come to mind: equity collars and prepaid forward contracts. Both are designed to protect higher net worth investors such as executives and business owners with large positions in stock from declines in stock prices. How are ‘high net worth’ and ‘large position in stock’ defined in the context of equity loans and prepaid forward products? Transaction sizes are typically in the $1 million in market value range, but there are programs for investors whose net worth is less than that. People who want to take advantage of such products should work with specialists like Chartered Wealth Advisors and tax advisers to find out how to take advantage of the products available. What are the purposes of these products? One offers a way for investors to diversify large stock positions; the other insures them against downward moves in the market. That applies especially to investors who have large holdings of one stock in one company, such as people who were awarded stock options by their employer
