SIGNUPABOUTBW_CONTENTSBW_+!DAILY_BRIEFINGSEARCHCONTACT_US


Cashing Out...

CONSIDER EXERCISING IF...

-- Your options are in-the-money--when the current share price is greater than 
the exercise price--and about to expire.
-- Your job is not secure or you're thinking about retiring or leaving, and the 
options expire upon or shortly after your termination.
-- The options are your only source of cash to meet an immediate need such as 
college tuition payments or a wedding.
-- You're confident the stock has peaked.

HERE'S HOW TO DO IT

-- CASHLESS EXERCISE Your broker will lend you the money to exercise, then 
immediately sell enough stock to cover the exercise price, commission, and 
taxes; you keep whatever is left over in cash or stock. This is the most 
popular method because you don't need any cash up front.
-- MARGIN LOAN Your broker can help you borrow as much as 50% of the value of 
your investment portfolio, or the options themselves pending delivery, to buy 
the stock. Rates will hover around prime.
-- STOCK SALE Sell shares of any stock you already own, pay capital gains, and 
use the remainder to exercise options.
-- STOCK-FOR-STOCK SWAP This exchange lets you use company shares you already 
own--deferring capital gains on any profit--as ``cash'' to exercise the option. 
You turn in the number of shares worth the option price to your employer now. 
Capital-gains tax is due whenever you sell. The same tax treatment applies to 
your options as if you exercised with cash.

DATA: STEPHEN PENNACCHIO, KPMG PEAT MARWICK


SIGNUPABOUTBW_CONTENTSBW_+!DAILY_BRIEFINGSEARCHCONTACT_US


Updated June 14, 1997 by bwwebmaster
Copyright 1996, by The McGraw-Hill Companies Inc. All rights reserved.
Terms of Use