Scribd Logo
Upload

Welcome to Scribd!

  • 13 views

    WM - Hedge and Monetize Template v1

    Uploaded by

    Saurabh Chauhan
    This document outlines two strategies for a client holding 2,000 shares of Alphabet stock worth $10,455,000. Strategy 1 involves establishing a Charitable Remainder Annuity Trust, which would allow deducting the present value of the future charitable gift while receiving annual annuity payments. Strategy 2 involves using a cashless collar, borrowing 90% of the protected principal at 3.5% interest to buy put options and sell call options to establish a price range within which the stock value can fluctuate tax-free. Both strategies aim to hedge against stock price volatility while generating tax savings and/or income.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    WM - Hedge and Monetize Template v1

    Uploaded by

    Saurabh Chauhan
    13 views8 pages
    This document outlines two strategies for a client holding 2,000 shares of Alphabet stock worth $10,455,000. Strategy 1 involves establishing a Charitable Remainder Annuity Trust, which would allow deducting the present value of the future charitable gift while receiving annual annuity payments. Strategy 2 involves using a cashless collar, borrowing 90% of the protected principal at 3.5% interest to buy put options and sell call options to establish a price range within which the stock value can fluctuate tax-free. Both strategies aim to hedge against stock price volatility while generating tax savings and/or income.

    Original Description:

    Assignment for Hedging and Monetizing investments

    Original Title

    WM - Hedge and Monetize Template v1 (2) (1)

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document outlines two strategies for a client holding 2,000 shares of Alphabet stock worth $10,455,000. Strategy 1 involves establishing a Charitable Remainder Annuity Trust, which would allow deducting the present value of the future charitable gift while receiving annual annuity payments. Strategy 2 involves using a cashless collar, borrowing 90% of the protected principal at 3.5% interest to buy put options and sell call options to establish a price range within which the stock value can fluctuate tax-free. Both strategies aim to hedge against stock price volatility while generating tax savings and/or income.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    13 views8 pages

    WM - Hedge and Monetize Template v1

    Uploaded by

    Saurabh Chauhan
    This document outlines two strategies for a client holding 2,000 shares of Alphabet stock worth $10,455,000. Strategy 1 involves establishing a Charitable Remainder Annuity Trust, which would allow deducting the present value of the future charitable gift while receiving annual annuity payments. Strategy 2 involves using a cashless collar, borrowing 90% of the protected principal at 3.5% interest to buy put options and sell call options to establish a price range within which the stock value can fluctuate tax-free. Both strategies aim to hedge against stock price volatility while generating tax savings and/or income.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 8

    STRATEGIES TO HEDGE AND MONETIZE STOCK POSITION

    Client Names:
    Prepared By:
    Client Provided Information
    Third Party Information
    Calculation and Outputs
    STOCK POSITION and AFTER TAX PROCEEDS:
    Shares of Alphabet, Inc. (GOOG)
    Stock basis per share
    Stock value per share as of:
    Stock Value
    Stock basis
    Capital gain upon sale
    Federal and State tax rate on capital gain
    Federal and State tax rate on ordinary income
    Federal and state taxes due on sale of stock
    Net after-tax proceeds from sale of stock

    Date:

    2/23/2016

    STRATEGY #1: CHARITABLE REMAINDER ANNUITY TRUST


    Gift date
    Assumed value of stock on gift date
    Term of annuity (in years)
    Current applicable IRS rate
    Min PV of charitable remainder, stated as % of stock value
    Min PV of charitable remainder, stated in dollar amount
    PV of annuity payments, stated in dollar amount
    Amount of annual annuity payment, received at end of period
    Tax savings in year 1 from charitable deduction
    Number of years to recoup net after-tax proceeds from tax savings and annuity payments
    Assumed growth of CRAT portfolio
    Amount to be transferred to charity at end of term(estimated)

    STRATEGY #2: CASHLESS COLLAR, WITH BORROW OF PROTECTED PRINCIPAL


    Desired expiration of option period
    Desired % range of protection from current market price
    Eligible borrow % of protected principal

    Rate of interest on borrow - current Prime interest rate


    Strike price of protective put
    Premium to pay for put, per share
    Premium to receive for selling covered call
    Maximum call strike price available for premium above
    Minimum price at which holder will suffer loss-Floor
    Maximum price at which holder will enjoy appreciation-Cap
    Total protected principal
    Available borrow amount of protected principal
    Annual interest charge upon borrow of maximum

    $
    $

    15,000
    0.25
    697.00
    10,455,000
    2,613,750
    7,841,250
    30.00%
    46.00%
    2,352,375
    5,488,875

    3/1/2016
    10,455,000

    $
    $
    $
    $
    $

    5
    2.20%
    10.00%
    $
    $
    $
    $

    nnuity payments

    1,045,500
    9,409,500
    (2,007,907) is this right I followed the powepoint instructions
    313,650.00
    (1,694,256.96) how u do dis shit
    8.00%

    how u do dis shit

    PRINCIPAL
    Jan-18
    10.00%
    90.00%

    3.50%
    $
    $
    $

    627
    93.5
    141.20
    640.00

    $
    $

    640
    640

    $
    $
    $

    9,600,000
    8,640,000
    302,400

    STRATEGIES TO HEDGE AND MONETIZE STOCK POSITION


    Client Names:
    Prepared By:

    Client Response Email

    Type client response here.

    You might also like