How to reduce risk in a Concentrated Stock Position Using ETFs (Without Overcomplicating It)

If you’ve built your career at one company — or cashed out of a startup here in Austin — chances are you’ve got a sizable chunk of your net worth in a single stock. That’s great when it’s going up. Not so great when the market decides to test your nerves.

The Problem: All Eggs, One Basket

Having $100K or $5M in one stock, even a solid one, is a big risk. If your company’s performance stumbles, your portfolio — and future plans — take the hit. But selling it outright might mean a huge tax bill, especially if you’ve held it for years.

The Solution: Strategic Hedging with ETFs

Enter ETFs (exchange-traded funds). These let you reduce risk without triggering a tax event. Let’s say you hold stock in a large tech company. You could hedge using an ETF that tracks the tech sector (like XLK) or one that inversely correlates (like PSQ for shorting the Nasdaq). These tools help balance your exposure without selling.

More advanced strategies might include options overlays, custom baskets, or structured notes — but even a simple ETF pairing can reduce your downside while you make longer-term plans.

Start with the Right Map

This kind of hedging isn’t DIY-friendly — but it is accessible. The key is working with someone who understands equity compensation, tax efficiency, and how to use ETFs correctly (not just pick random tickers off Reddit).

Need a second opinion on your stock-heavy portfolio?

Let’s map out a simple hedging strategy that fits your goals and keeps your taxes in check.

Schedule your risk review today.