Quick answer
What are the main strategies for a concentrated stock position?
Pick by goal. To diversify: sell over time, exchange funds, or direct indexing. To protect: collars, protective puts or prepaid variable forwards. To raise cash: securities-based loans. To give: gifts, donor-advised funds or charitable remainder trusts. To earn: covered calls or a §721 income SPV. Most founders and executives combine two or three.
Key takeaways
- 01Start with the goal (income, protection, diversification, cash or giving), not the product.
- 02Insiders face extra rules: 10b5-1 plans, blackout windows, Rule 144 and Section 16.
- 03Paths that keep 100% of the position working avoid paying tax up front.
- 04Income is the most underused option: it pays you while you decide what to do next.
| Diversify | Staged sales, exchange fund, direct indexing |
|---|---|
| Protect | Collar, protective put, prepaid variable forward |
| Raise cash | Securities-based line of credit |
| Give | Gifts, DAF, charitable remainder trust |
| Earn | Covered calls, §721 income SPV, Income+ |
| Insider rules | Rule 10b5-1, Rule 144, Section 16 |
The Short Answer
Which strategy should a founder or executive use?
Start with the job, not the product. Income: covered calls, Income+ or an Embark SPV. Protection: protective puts or a zero-cost collar. Diversification: staged sales under a 10b5-1 plan, an exchange fund, or charitable gifts. Cash now: securities-based lending or a prepaid variable forward. Most founders end up combining two or three.
Strategy Matrix
Which strategy fits which goal?
| Strategy | Primary job | Tax at start |
|---|---|---|
| Staged sales (10b5-1) | Diversification | Yes |
| Exchange fund | Diversification | No |
| Charitable gift / DAF / CRT | Diversification + giving | No |
| Protective puts | Protection | No (premium cost) |
| Zero-cost collar | Protection | Usually no |
| Prepaid variable forward | Cash + protection | Usually deferred |
| Securities-based loan | Cash | No (interest cost) |
| DIY covered calls | Income | No |
| Income+ managed account | Income | No |
| Embark §721 SPV | Income + tax deferral | No |
Capital at Work
How much of the position does each path keep working?
Chart
Share of a $5M, $500K-basis position still invested on day one (California)
Founder & Exec Constraints
Which insider rules limit founders and executives?
Trading windows and blackout periods
Most hedges, sales and option trades must happen in an open window.
Rule 10b5-1 plans
Pre-scheduled sales; cooling-off periods apply before the first trade.
Company hedging and pledging policies
Many companies ban hedging or pledging by insiders; check before collars or loans.
Rule 144 and Section 16
Affiliates face volume limits and short-swing profit rules.
Lockups after IPO
Nothing moves until the lockup ends.
Clear it with your general counsel: Option strategies, including covered calls, can count as hedging under company policy. Get pre-clearance in writing.
Where Embark fits
Of every strategy here, one keeps 100% of the position working and pays you.
Run your ticker to see what Embark's SPV could target in annual income.
- 100% of the position stays invested: no sale, no tax at contribution
- Targets 10%+ annual income on founder or executive stock
- Pair it with staged sales or gifts for the shares you want out of
Run the numbers
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Combinations
Which combinations do founders and executives use?
Post-IPO founder
10b5-1 staged sales for diversification + charitable gifts of the lowest-basis lots + income on the core you keep.
Late-career executive
Collar the core to protect retirement + exchange fund for part + income on the rest.
Senior engineer, years of RSUs
Sell new vests at vest (minimal gain) + income on older, low-basis shares. See diversifying RSU concentration.
Needs a house down payment
Securities-based loan for the cash, income strategy to service it.
The Income Job
Why is income the most underused strategy?
Most advice to founders is about getting out. Many founders don't want out; they want the position to fund their life while they keep believing in it. Embark's SPV takes an in-kind §721 contribution ($0 tax at contribution), targets 10%+ annual income, and has a three-year lock-up. Income+ does the same in your own Schwab account with no lock-up but no tax deferral. Founder-specific detail is in Diversification for Founders and Executives.
FAQ
Frequently asked questions
What are the main strategies for a concentrated stock position?
Staged sales, exchange funds, charitable gifts, protective puts, collars, prepaid variable forwards, securities-based lending, covered calls, and managed income structures such as Income+ or a §721 SPV.
How do founders get liquidity without selling?
Common routes are securities-based loans, prepaid variable forwards, and income strategies on the shares. Each avoids an immediate sale but has its own costs and company-policy constraints.
Can executives sell covered calls on company stock?
Sometimes. Many companies treat options on company stock as hedging and prohibit or restrict them for insiders. Check your insider trading and hedging policy and get pre-clearance.
What is a 10b5-1 plan?
A written trading plan, adopted when you hold no material nonpublic information, that schedules future sales in advance. Since the SEC's 2022 amendments, directors and officers face a cooling-off period of at least 90 days before the first trade.
Can founders use an exchange fund?
Yes, once their shares are freely tradable and on the sponsor's accepted list. Shares subject to IPO lock-ups or Rule 144 restrictions usually cannot be contributed until those lift.
What is the best strategy for a concentrated stock position?
There is no single best one. For most holders the answer is a combination: sell a slice each year, protect or diversify a slice, and put the rest to work earning income.
How do I diversify a large position in my employer's stock?
Combine a 10b5-1 selling plan with gifting, tax-aware diversification and, where your policy allows, an income overlay, and coordinate with your company's legal team.
Sources
Regulations
Cite this article
Embark Funds Research. “Concentrated Stock Strategies for Founders and Executives.” Embark Funds, updated October 15, 2026. https://www.embarkfunds.com/insights/concentrated-stock-position-strategies
Not tax or legal advice: This article is educational. Exchange funds, partnerships and gifts carry rules that depend on your facts. Work with a CPA and an attorney before acting. Embark income figures are targets, not guarantees.
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The income job, done without a sale
Pick Your Ticker. See the Income Target.
Founders and executives use Embark to turn low-basis stock into income without selling. Run your ticker to see the number.