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Date:   Thu, 02 Feb 2006
From:   Angela

Hi! Great web site. I have a question.

My husband works for Verizon. He has NSOs for 400 shares at $54 and 213 shares at $44. The price today for Verizon shares is $31 per share. Can he cash his options in at $31?

Thanks so much for your time!
Angela

Answer

Date:   Wed, 08 Feb 2006

Hello Angela,

The description commonly used for your husband's options is "underwater". He can buy shares on the stock market for less than the option price. In this situation, the options will only become valuable if the market price of the stock increases to be more than the option price.

If you and your husband want to buy Verizon shares at $31 per share, simply place an order with your stock broker.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report, Non-Qualified Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.