Some people have a large single stock position from a company they used to work at... but not everyone knows what to do with it. Gina DeRaimo, SVP, Head of The Options Institute at Cboe Global Markets, joins Cheddar News to break down what you can do with large stock positions.

What To Do With Large Stock Positions

This segment is brought to you by CBO, the world's leading derivatives and securities exchange Network. Some people have a large single stock position from a company he used to work at but not everyone knows what to do with it. So today we're going to break down what to do with large stock positions. Joining us now, Gina Deramo, S V P head of the Options Institute at CBO Global Markets. Welcome to the show. I've heard so many people talk about this when they move to their next job, what are the choices you have? Gina, if you think your stock is going to go up after earnings, it's a great question. We like to encourage everybody to recognize first that they have three choices always in the market. You can either be in the market and along the position, you can be short the position or you can have no position. So when you come in with an existing portfolio, that's long, encourage everybody to start by remembering their goals both in the short run and medium run in the long run before they make any active decision in terms of how to position accordingly going forward on the other hand, what are the choices, if you think your stock is going to go down post earnings? So if you think it's going to go up or down based on a particular event like earnings, we encourage everybody to understand what they want to do in that medium and long run. In terms of how they hope to capture that performance exposure, you can either buy stock and gain more exposure to capture that performance. If you believe earnings are going to go up, or you can take advantage positions to capture that downside, move that you might feel is possible. Depending on your perspective on the earnings call. How can someone use options in these situations? Options are just another tool to express those opinions for being long short or out of the market altogether, neutralizing some of the risks. But it's always important to understand both the costs and the benefits of any position you choose to incorporate into your portfolio. And we also encourage everyone to talk to their financial advisor, their tax planner to make sure that the full comprehension of those choices is understood before taking any action. I have to ask because I know this is one of the questions on so many people's minds. What are some of the risks and considerations that people should take into account in this situation? Sure. It's really important to understand where your break even parameters are as well as your max gain and loss on each of the strategies you choose to employ. So when we talk about risks, the easiest way to understand it is really asking yourself, where are you most comfortable with your maximum loss profile? In a lot of cases, it's not just the premium paid. But when you work with instruments like options that max loss can actually be much more significant than most people understand in their early stages of learning. So we encourage everybody to have a comprehensive education before employing these tools in their portfolio. A lot of great information, Gina Remo S V P head of the Options Institute at CBO Global Market. Thank you so much for your time and to learn more about options trading visit CBO dot com.