$17.62, baby!

A couple of weeks ago we had an ice cream social in the office for a co-worker who was transferring to another position at our company's web audience group. This was about a week after the end of the latest ESPP period and a bunch of co-workers were engaging in the twice-annual ritual of bragging about how much they got for having sold their ESPP shares. During this exercise in one-upsmanship, I just sat sheepishly in the corner, not saying a word.

What I was too embarassed to admit was that I had yet to sell my shares and that the price had since fallen to a price that was much lower than what my co-workers had sold theirs at. Normally when I receive my shares at the end of an ESPP period, I look at the closing price of our company stock on that last day and set a limit order to sell at about 10 cents higher. This has worked well the last three or four times but on this most recent period, I almost missed the boat.

The stock closed at $17.40 per share on the very last day of the purchase period and I set a limit order to sell at $17.57 or higher. That next trading day, the stock traded between $17.15 and $17.54 and my order was not executed. The stock then drifted lower in the next five trading days and by the time we were having ice cream in the conference room it had fallen below $17. This is the worst thing that can happen to those who hold onto their ESPP shares, the only way to loose money in participating in your company's ESPP plan is if you hold onto your shares and the price drops. I thought about lowering my limit price, or cutting my losses and selling at the high 16s. But I did nothing.

Yesterday morning I saw that the stock had made a nice recovery to around $17.50. I changed my limit price, not by lowering it but by raising it to $17.62. It was executed at around noon yesterday.