[chollida1]

This is good advice, with 2 caveats.

1) Options don't start trading until well after the stock has gone public, usually atleast 3 months so you can't use this method to hedge out of the IPO gate. This is an exchange issue, not a liquidity issue.

2) So, after selling calls you can take that money you made from the premium and buy puts with it at around the same price.

Put call parity assures you that you won't make enough selling calls to buy puts at around the same price. ie you'll need to put some of your own money into this. I think the author did a good job of indicating this but it should be made clear to people before tyring to do this.

To be clear, following this strategy it helps lock in a price lower than the current market price for your shares, so you know what you'll make if the stock goes down.

However it also means that if the stock takes off you won't get any of the upside. Keep that in mind as it can be very hard psychologically to watch everyone else around you make money while you've capped your upside.

[nemo44x]

Indeed about the put/call parity. Or, you simply buy puts at a different strike and take on some risk. But yeah, you'll probably spend some money to "lock up" this deal.

And you're right, options generally take some time to begin trading - especially if the volume is low on the common stock anyhow.

Another method if you can is simply short the stock as soon as you like the price. Then replace the stock when your stock is freed up. Naturally this requires margin and problem that you could get margin called if the stock goes through the roof! Hedge with calls then that are way out of the money then too.

Also, there's the issue of shorting your own company!

[crito114]

Indeed, most companies have insider trading policies that prohibit taking short positions.