A new client, one volatile stock, and most of a net worth riding on it. Here is the three-part structure we are building instead of the usual binary.
This is one of the most creative cases we are working on right now. We are onboarding a client holding a single, volatile stock that has grown into the dominant position in their net worth. Years of upside, all in one name, and all the risk that comes with that.
The dilemma is the classic one. Too risky to hold, because one bad quarter can erase years of gains. Too expensive to sell, because the embedded gain means a capital gains bill that takes a brutal bite.
The usual advice here is binary: ride and pray, or sell and pay. We don't think in binaries. Here is the three-part structure we are building, customized to this client's basis and brackets.
We are buying a put option to set a floor under the position and selling a call option to help finance it. Downside defined, no shares sold, no gain triggered. The mandate on this leg is simple: structure it so a 20% drawdown is off the table.
With the position protected, we are borrowing against it with a box spread: liquidity at a rate near Treasuries, set by the options market rather than a bank's lending desk. The client gets cash for their other goals, the position stays intact, and the gain stays deferred.
The portfolio has no spare liquidity without the box spread, so the loan proceeds go to work: they fund a direct indexing account built for tax-loss harvesting.
From there, we sell the concentrated name down gradually while harvesting losses elsewhere in the portfolio. Each year's realized gain gets offset by banked losses, so the unwind lands near tax-neutral.
Protected. Liquid. Exited tax-neutrally over time.
None of this is free, and it is worth being plain about the costs. The collar caps upside above the call strike. The box spread is borrowed money that has to be rolled and repaid, and a drawdown works against it. The exit takes years and discipline, and constructive-sale rules have to be respected at every step of the structure.
None of these tools is exotic on its own. The creativity is in sequencing them, protection first, then liquidity, then a patient tax-neutral exit, as one coordinated plan instead of three disconnected trades.
This is exactly the kind of problem most firms are not built to solve. It takes options, financing, and security-level tax management working together, tailored to one person's numbers. You cannot run it off a model. The full menu of tools for positions like this is in our guide: What to Do With a Concentrated Stock Position.
If a single position has quietly become the dominant risk in your portfolio, there is a better path than hold-and-pray or sell-and-pay.
Client details anonymized. Strategies shown are illustrative, involve risk, and are not suitable for everyone. This is informational only and not personalized tax, legal, or investment advice.
Holding one stock that has become the dominant risk in your net worth? We will map your basis, your brackets, and your options, and show you what a coordinated plan looks like.
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