Got a Lot Riding on One Stock? Here’s How to Make It Work for You

If you’ve built massive amounts of wealth through one stock, maybe from years of employment at a company, founding one, or making a bet that paid off, hats off to you. That’s not easy to pull off. Whether it's tech, pharma, or any other industry, being early and right can change your financial life.

And you’re not alone.

At Savvy, we work with clients who have what we call concentrated stock positions. That just means a large part of their net worth is tied up in a single company’s stock. This is especially common among tech professionals, startup founders, and long-time executives who received stock options as part of their compensation.

Oftentimes, as the size of that position grows, so do the risks and the potential stress. A single earnings call or headline can move your net worth up or down by hundreds of thousands (or more) in a single day.

The good news? You don’t have to sell it all or give up your upside to mitigate concentrated stock risk. There are strategic ways to help protect what you’ve built, while still staying invested in the potential growth and avoiding capital gains tax by selling.

But before we jump into strategies, it’s important to recognize that managing a concentrated stock position isn’t just a numbers game. It’s often emotional. Maybe this stock changed your life, or maybe it represents years of hard work and belief in a company. That’s why we approach these situations with both technical tools and human understanding, helping clients find peace of mind without feeling like they’re giving up on what got them here.

These types of situations aren’t just common. Often, they’re the starting point for real, strategic wealth planning.

Why Concentrated Positions Aren’t Always Bad

It might sound counterintuitive in a world that praises diversification, but concentrated stock positions may often be how significant wealth can be created. Just look at early employees at companies like Apple, Tesla, or Google. People at these companies holding a large position, likely contributed to their long-term financial success.

Benefits of holding a concentrated stock position:

• Upside potential: If the stock continues to grow, your wealth grows with it.
  
  
• Tax efficiency: Long-term capital gains treatment means you could pay less tax when you eventually sell.
  
  
• Familiarity and confidence: You probably know the company better than anyone. That level of knowledge can be a real advantage.
  
  

But without a game plan, one bad quarter can sink your net worth overnight. That's why it's important to protect the downside while aiming to preserve the upside.

Strategy #1: Exchange Funds — Diversify Without Selling

If you’ve got at least $5 million in a single stock and a long-term outlook, exchange funds can be a helpful tool to reduce your risk without triggering capital gains taxes.

How they work:

• You contribute your concentrated stock into a professionally managed fund.
  
  
• The fund combines your shares with stocks from other investors in similar situations.
  
  
• After a 7-year lock-up period, you get a diversified basket of stocks in return.
  
  

Why clients may pursue this option:

• No tax hit now: You defer capital gains taxes by contributing your stock to this fund.
  
  
• Stay in the market: You're not selling, but swapping one stock for many.
  
  
• Professional oversight: These are typically institutional-grade funds often managed by professional investment firms.
  
  

This strategy is ideal for people who don’t need immediate liquidity and are okay waiting a few years in exchange for long-term diversification.

Strategy #2: Hedging with Options — Stay Invested, but Consider Time Horizon

Seven years is a lot of time to wait, so if you want more flexibility, you can explore hedging with options. This means you’ll add a platform of protection in case your stock drops, kind of like buying insurance for your stock. 

Here are a few options-based strategies we often explore:

• Protective puts: Limits your downside if the stock were to go down.
  
  
• Proxy hedging: If you’re restricted from trading your own stock (as many insiders are), you can hedge a similar stock or sector ETF with high correlation. For example, hedging Microsoft with a tech ETF.
  
  
• SpiderRock: This is a platform for automating and customizing options-based strategies based on your specific holdings, risk tolerance, and time horizon. It can bring institutional-level precision to individual portfolios.
  
  

Some clients are turning to this strategy because it allows them to stay emotionally and financially tied to the company while managing volatility. For executives or employees still working at the company, options-based hedging is often the only way to relieve stress without violating trading windows or insider restrictions.

Options strategies can offer protection and greater flexibility than exchange funds, and can also be tailored to short or long-term needs.

Strategy #3: Informed Selling: When and How to Sell Strategically

Sometimes, the best move is to start trimming your position, but in a tax-efficient and emotionally detached way.

Some approaches we help clients with:

• Tax-loss harvesting to offset gains.
  
  
• Selling over time to spread out gains across multiple years.
  
  
• Donor Advised Funds to minimize taxes and support causes you care about.
  
  
• Using charitable remainder trusts (CRTs) to offload stock while generating income and reducing taxes.
  
  

Selling can also help you generate the cash needed for other life goals. Whether it’s buying a second home, investing in a new business, or just knowing you have liquid assets on hand. By creating a selling plan in advance, you remove emotion and make better long-term decisions.

Selling doesn’t mean giving up; it means taking control and turning paper wealth into financial power.

Why This Matters

This isn’t just about charts, taxes, or asset classes; it’s about peace of mind.

Clients can go from losing sleep over their stock position to feeling confident and in control with just a few strategic moves. When your financial future is tied to a single stock, doing nothing might be the riskiest choice.

At Savvy, we set out to help clients manage these positions with care. Whether it’s protecting gains, managing taxes, or planning for long-term goals, we bring thoughtful strategies into personalized wealth plans.

No two concentrated positions are alike, and no two clients are either. That’s why we don’t take a strict outline approach. Whether your goal is to grow, protect, or eventually pass on your wealth, we build strategies around your life, not just your stock.

Bottom Line

A concentrated stock position is nothing to be ashamed of. It’s often the result of hard work, smart risk-taking, and big vision. But now that you’re here, it’s time to treat that asset like the powerhouse it is.

Whether you want to hedge, diversify, sell strategically, or just talk through your options, we’re here to help.

Let’s build a plan that gives you confidence, not anxiety.

The worst thing you can do with a concentrated position is ignore it. Markets move fast, and so does life. Whether you're thinking ahead to retirement, planning a major purchase, or just want to reduce the daily stress of checking your portfolio, having a strategy in place puts you back in control, and that’s what real wealth management is all about.

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