Think of a prepaid variable forward (PVF) as a flexible contract that lets you tap into the value of your stock today — without being forced to sell it right away.
It’s a strategy often used by people with a big chunk of their wealth tied up in one stock.
Instead of selling shares (and facing an immediate tax bill), you receive cash upfront while still maintaining upside potential and control.
At its core, a PVF is an agreement between you and a bank or financial institution:
- You pledge a set number of shares as collateral.
- The bank gives you an upfront cash payment (often 75–90% of the stock’s current value).
- In the future — usually 2–5 years — you deliver either the shares or cash, depending on how the stock performs.
