Yes, holding too many options or shares (as a percentage of your total wealth) can expose you to concentration risk. Having too much of your money is a single stock increases the risk that, if the stock price goes down, you might lose a significant portion of your worth. If you have enough assets or earning capacity elsewhere, you may decide to tolerate a higher degree of concentration risk with your equity compensation, hoping to “strike it rich.” On the other hand, if your financial well-being depends on keeping profits already achieved, it may be time to reduce your stock and stock option concentration risks. A general rule of thumb is to avoid having your company stock + options exceed 10–15% of your total wealth.
