How can you do an employee stock option cashless exercise?

Jeffrey Coats

I have employee stock options which are managed through Solium, an outside service.  I can do a cashless exercise that allows me to convert options to owned shares by selling a limited number of options to use the cash proceeds for the overall exercise.  For example, if I have 10,000 options at a $1 strike price and the market price is $5, I only need to sell 200 shares to cover the overall exercise price of $1,000.  So I sell 1,000 and hold 9,000 shares.  Quicken wont let me enter a transaction like this.  Help. 

Tom Young

I've never entered the grant of an employer stock option in my real-world Quicken file, but it seemed obvious to me that you could do a sell to cover (AKA "cashless") exercise in Quicken, so I set one up in a test file and it seemed to work just fine:

I exercised all 1,000 shares, creating a "negative cash" situation of $1,000, and sold 200 of those shares at the $5 market price to zero out that negative cash.  Ended up with 800 shares immediately after those "same day" transactions.

You may think that you can first sell 200 shares to raise the $1,000 you need to exercise, but it doesn't work that way.  You exercise and then sell the 200 shares to cover your debt.

mshiggins

I assume the grant has been entered in Quicken and the shares you want to exercise are vested. 

You would then do a same day sale to enter your cashless exercise. 

Jeffrey Coats

Yes it is already entered. That approach doesn’t work because I need to sell enough of the shares to cover the exercise cost and Quicken doesn’t give me the flexibility to do that.  Your approach only works if I am exercising and selling all of the exercised shares. 

Tom Young

I've never entered the grant of an employer stock option in my real-world Quicken file, but it seemed obvious to me that you could do a sell to cover (AKA "cashless") exercise in Quicken, so I set one up in a test file and it seemed to work just fine:

I exercised all 1,000 shares, creating a "negative cash" situation of $1,000, and sold 200 of those shares at the $5 market price to zero out that negative cash.  Ended up with 800 shares immediately after those "same day" transactions.

You may think that you can first sell 200 shares to raise the $1,000 you need to exercise, but it doesn't work that way.  You exercise and then sell the 200 shares to cover your debt.