Your NSO Selling Playbook: From Exercise to Liquidity

Tara Shulman is a Principal Wealth Advisor at Compound. She has extensive experience guiding clients through IPOs, including Figma, Anthropic, Coinbase, and numerous other tech company liquidity events.

If you’re a Figma employee or anticipating a similar exit event, you may hold one equity compensation type or a combination of NSOs, RSUs, and ISOs in your equity package. This manual covers NSOs. Click here for our Manual on RSUs and here for our Manual on ISOs.
It’s a question facing a lot of Figma employees in 2025, and it’s top of mind for any employees who are preparing to navigate a liquidity event.  

If you’ve struck luck with an IPO and you’re now deciding what to do with your NSOs, it’s important to plan ahead. You should talk to an advisor well in advance to ensure you’re optimizing for the best outcomes for you. And if you’re reading this Manual, you’re off to a great start.  

Focus too much on the most “lucrative” outcome, and you might not be choosing the right path for you. It’s not always about timing the sale in accordance to peak stock price. You need to understand your risk tolerance, decide which outcomes you’d feel comfortable accepting, and develop a plan to build a portfolio that aligns with your financial goals. 

Thinking ahead and building a structured selling system that includes liquidity targets based on possible scenarios is key for aligning your next steps with your total financial picture. 

Important note on exercising your NSOs or ISOs:

• If your stock options were granted before 2020 and you’d like to exercise or sell them, you may need to do so before their expiration date on Feb 6, 2026.
• If your stock options were granted in 2024 and you’d like to exercise or sell them, you may need to do so before their expiration date on July 30, 2026.

Key Takeaways:

• Start planning your NSO strategy during the lockup period. Include a structured selling ladder with limit orders that balance your goals and risk tolerance.
• Schedule regular check-ins with your advisor to reevaluate your limit orders as the market fluctuates and your needs change.

The NSO Tax Trap: When Maximizing Stock Holdings Undermines Total Wealth

After tech employees have exercised their NSOs and paid the corresponding income tax on the spread, we often see a common issue arise: NSO holders laser-focus on predicting the stock’s peak price. They choose to hold onto their stocks hoping for a big win, while a high percentage of their net worth remains in a single stock.

After paying taxes on exercise, NSO holders feel they've already "paid the price," and they don't want to "leave money on the table" by selling too early. In reality, there's no tax advantage to holding NSOs long-term, and reallocating your wealth could set your portfolio up for better wins than leaving your money in a concentrated stock position. 

Instead of asking, "when will the price peak?" ask "can I generate enough after-tax liquidity to reach my goals with the current price?”

Reframe your NSO decision by evaluating: Right now, and into the future, is Figma the best place for my wealth? Maybe Figma stock hasn't peaked, but if you reinvest it elsewhere, your capital could grow more effectively. 

It’s important to determine how much of your wealth should stay in Figma stock versus other investments, and that requires a plan that balances protecting your liquidity needs with maintaining upside potential.

By building a structured selling system with limit orders at specific price targets, you'll have confidence that you're prepared for multiple outcomes — not betting everything on one ideal scenario.

Navigating Your NSO Sale Decisions

Step by step, you can build a selling schedule that balances your liquidity needs, tax efficiency, and mental preparedness for when volatility comes. And you should start during the lockup period to make sure your decisions are thoughtful and proactive, not reactive and impulsive.

‍Step 1: Calculate Your After-Tax Liquidity Target (Not Your Stock Sale Target)‍

First, figure out how much cash you want to have on hand. Start with your long-term goals, then work backwards to figure out the after-tax liquidity you’re looking for. 

An advisor can help you identify specific dollar amounts for your life goals, like buying a house, supporting family members, going through a career transition, or carving out financial independence. That can help you with all your future decisions. 

Establishing clear liquidity targets tied to your goals will help you build a plan for various scenarios during your NSO selling windows.

QSBS Eligibility for Early Exercisers
‍Figma employees who exercised NSOs before mid-2019 may qualify for Qualified Small Business Stock (QSBS) treatment — a $10 million tax exclusion on gains.

You’re eligible if you exercised your options before the threshold.

Step 2: Visualize Your Downside Scenarios 

How much stock volatility can you handle? Understanding the gap between your best-case and worst-case scenarios will help you make deliberate decisions about when to sell, rather than reacting emotionally to price changes.

Using Compound's Equity Simulator, you can model what various changes in the stock price could look like and how they could impact your net worth. Your advisor can help you model what happens if you hold all your stock versus selling some to diversify into cash and other investments. (The simulator shows your total net worth across multiple price scenarios, not just stock value.)

It’s fun to see what gains could look like, but it’s more important to test your own risk tolerance. You have to hold all possible outcomes equal, because you have to be prepared for any market scenario.

Step 3: Build Your Structured Selling Ladder with Limit Orders

Now, you're ready to build a structured selling system using limit orders: a ladder of limit orders with specific share quantities at different price triggers.

For example: You might set up a ladder that sells 100 shares when the stock reaches $100, another 100 shares at $110, and so on.

The scenarios you modeled in Step 2 can help determine your price triggers. If your downside scenario shows that you need $2 million minimum to be comfortable, you can calculate what share quantity at what price delivers that after-tax, then set your first limit order accordingly.

Your advisor can help you define your implementation details: the quantity of shares to sell at each price point, your floor price (the minimum you’re willing to sell at), and the type of limit orders that protect you from panic-selling or putting your portfolio at risk during market swings.

Step 4: Establish Recurring Check-ins to Adapt Your Plan

A selling ladder is only effective if you actively manage it as the market conditions or your personal situation changes. You should schedule regular check-ins with your advisor during the lockup period and leading up to each selling window to reevaluate your selling system.

Meet with your advisor regularly (typically monthly, or weekly if your situation is more complex). Continue quarterly check-ins as selling windows occur after the lockup period ends.

During these check-ins, you’ll review the current stock price and how it compares to your price ladder. Together, you can adjust limit orders based on changing needs, discuss whether the sales you’ve executed have met your goals, and prepare for upcoming selling windows. 

Click here to chat with a Compound Planning advisor about your NSOs. 

The stock can move significantly within a day, so you should always plan for volatility. These check-ins will reinforce your original logic during sharp price swings, when you might otherwise react emotionally.

The Impact of a Structured Approach

It's easier to identify a successful outcome looking back. With a structured approach, you can reflect on your decisions later on and feel good that you’ve accomplished the goals you’ve set while building the financial future you want. 

By planning ahead, you will be more likely to achieve your life goals regardless of whether the stock keeps rising, and will help to protect your portfolio from downsides when it underperforms.

Scenario modeling gives you the confidence to distinguish noise from signal — one of the most important pieces of growing your wealth.

FAQs

Why should I sell my stock after exercising NSOs if I've already paid taxes on it?

‍Many employees feel hesitant to sell after paying taxes on exercise, thinking they've already "paid the price." But holding all your stock creates concentration risk — having your entire net worth tied to one company. Selling strategically allows you to secure your financial goals while maintaining some upside exposure.

How do I determine how much stock to sell?

Start by calculating your after-tax liquidity target based on concrete life goals: buying a house, supporting your family, or planning career transitions. Then work backwards to figure out how many shares you need to sell at various price points to reach that target. Use scenario modeling to visualize both best-case and worst-case outcomes, which will help you determine the right balance between securing liquidity and maintaining upside potential.

What is a selling ladder and how does it work?

A selling ladder is a structured system of limit orders set at different price points. This approach removes emotion from the decision-making process and ensures you're systematically de-risking as the stock price rises, rather than trying to time the perfect peak, or panic-selling during a dip.