What is the preferred strategy for handling the shares acquired by an NQ exercise?
GCD believes that these shares should be sold the same day they are exercised. Since ordinary tax was just paid on the exercise (see #12), the upside for future growth beyond the market price on the date of exercise (only to be taxed at long term capital gains rates) is far less than the downside of the stock falling after the client just paid ordinary tax rates. If you are further bullish then you should strongly consider exercising by attestation when the option gets 25% in the money and still selling the new net shares. If you are bullish, and the stock does go up, your replacements will bring additional value. But if the stock goes down, you will have pulled out the equity anyway.
