$5M in Tesla. $4M for a House. Zero Tax. Here's How.

This is a situation I encounter regularly. An investor has built significant wealth in a single stock. They need liquidity for something real — a house purchase, a business investment, a tax bill. But selling the position means crystalizing a gain that could cost them 30-40% of the proceeds before they see a dollar.

Most advisors present two options: sell and pay the tax, or don't sell and don't get the house. There is a third option.

The Box Spread Solution

A box spread is a four-leg options structure that functions as a market-rate loan. You execute the structure in your brokerage account, collect the proceeds upfront, and repay at expiration. The rate is set by the market — typically close to Treasury rates — with no credit check, no bank approval, and no forced sale of your position.

In this scenario: $5M in Tesla, need $4M for a house. You execute a box spread sized to raise $4M. You collect the cash. You buy the house. Tesla keeps compounding in your account. You repay the box spread at expiration from cash flow, a future sale, or another box spread. The tax on the Tesla gain is deferred — potentially indefinitely.

What About the Risk?

The box spread itself carries no directional market risk — it is fully hedged by construction. The risk is in the concentrated position itself, which exists regardless of whether you borrow against it. If the stock falls significantly, your collateral value drops and the position may need to be managed. This is why sizing matters, and why we model the downside scenarios carefully before executing.

The Prepaid Variable Forward Alternative

For investors who want to hedge the downside of the concentrated position at the same time as accessing liquidity, a prepaid variable forward (PVF) is another tool. A PVF allows you to receive cash upfront in exchange for delivering shares at expiration — with a defined floor and ceiling on the share price at delivery. You get liquidity, you get downside protection, and you defer the tax event to expiration.

Both tools exist. Which one makes sense depends on your tax situation, your view on the position, and your liquidity timeline. At STQ, we model both and recommend based on your specific circumstances.