Thank you. I missed your earlier post. You laid it out very clearly and I appreciate that.
This reflects that Raj holds a bullish view.
If he thought the current PPS was unsustainable, (if he thought it might be $10 soon) he would have waited to exercise at the lower PPS (paying less ordinary income tax) but still start the clock on LT Cap Gains.
If he felt the current PPS was unsustainable he might have exercised and sold (but have to pay the 37% short term gain rate).
If he felt the PPS would increase in 2018 he would do what he did: exercise early in the year, paying income tax (via shares) on the gain, starting the LT Gain clock, and holding. (If he waited and the PPS went to $30 he would have paid more taxes at the higher rate)
Am I thinking about this right?
If your intent is to hold after exercise, the best scenario is to exercise at a low PPS (shifts further gains from the 37% rate to the 20% rate)? But if it's too low a PPS the options aren't worth exercising?
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