If Employees Monetize Options With Call Options, Is It Taxable?

Recently, the SEC issued a new rule allowing employees with vested, unexercised stock options to use them as collateral to purchase call options as a way to obtain some cash value for the shares they can exercise. Generally, employers are less than enthused about allowing employees to hedge options this way, but if they do allow employees to do so, an unresolved question is whether the strategy will be considered a sale and, if so, at what rate and when. The issue is complicated, and it may be some time before there is any clarity on this matter.