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Technology Stocks : Dell Technologies Inc.

DELL 122.84

-8.2%

1:12 PM EST

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To: Geoff Nunn who wrote (135440)	7/3/1999 11:57:00 AM
From: Chuzzlewit	Read Replies (1) of 176387

Good morning Geoff, I think you are generally correct in your assessment of the transaction costs. If I understand you correctly, you advocate buying a sufficient number of shares for delivery and then letting those shares be assigned. In the case I am looking at (500 shares and 5 contracts), the cost is roughly $.125 (for the spread)plus brokerage commissions which would be $.055, or roughly speaking $.18 per share compared to a cost of roughly .0625 for the spread plus .09 for brokerage commissions (.03 to buy the shares and .06 for assignment), or .1525 per share. So the savings would be about $.0275 per share or less than $15 on 500 shares. The cost of writing a new call is irrelevant because it would be done in any case. [Edit]: But if one embarks on the strategy you outlined I think you must specify that the shares to be delivered on assignment will be the ones just purchased otherewise the original shares will be assigned. My question is framed entirely from the tax point of view. Specifically, suppose the the original call was written for a premium of $4 and the call is repurchased at $6 and a different call was written against the same stock. Can a tax loss of $2 per share be claimed or does the wash rule apply despite the fact the the new call is written with a different expiration date and a different striking price? Thanks, TTFN, CTC

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