Buying options in US market for hedging company RSU's

F&O
1

Hi everyone,

It looks like a topic that has been beaten to death but I have a very specific requirement. I work for US tech company and as a part of my compensation I receive company stocks. Since these stocks are listed in NASDAQ they are traded in the US market.

NASDAQ has given a good run up meaning my RSU’s have also gone up in value. But not all RSU’s are available for sale immediately and they will become available for me to sell only in December.

I am looking to buy some put options in December expiry to hedge against any massive price fall to protect my RSU value.

I have looked at this Trading Derivatives in USA from India and may other threads in reddit. There is a lot of conflicting information regarding the legality of this. Is there anyone here who has done this and reported in ITR?

Many people are saying since buying put/call does not need leverage it is not considered illegal and some brokerages do allow it. Buy Nithin in the discussion above is clearly saying brokerages would allow for many things as it gets them business but its still illegal. I did see a thread that said LRS cannot be used for margin etc.(All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty are not allowed under the Scheme.) But RSU’s are already in the US and technically is not money earned in India. Does that mean we can use that for margin/trading?

Any help from experts is appreciated.
Thanks

2

Also, in case you haven’t yet,
you may also want to check with your US company’s Insider trading policy.
(or their legal/finance team)

Usually, the company policies prohibit employees from
getting involved in derivatives of the company stock.

1 Like
3

Buying puts on a company you work for is not a wise idea, even for hedging.

You can hedge against an index or the market as a whole without drawing suspicion I guess.

4

This is a good point. Let me check the rules.

5

Hi all,
After a lot of research I can only see one option - buy inverse ETF’s in the index your employer has a significant contribution. Would my analyis be correct? Any experts please comment.

Thanks