SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 171.54+0.4%Nov 10 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Voltaire who wrote (48290)11/7/1999 12:35:00 PM
From: Greenfield  Read Replies (1) of 152472
 
Thank you for your very informative case study.

I have a couple of questions.

1) The strategy saved you a lot on capital gains tax (compared to simply selling half the position). What would you have done differently (if anything) had the 10,000 shares been in a tax sheltered plan?

2) What are the criteria for deciding to cover 50% of the position? Why not 25% or 75%?

3) What is the worst possible outcome of all this? I assume it is if the stock skyrockets and your shares are somehow called away before you have a chance to buy back your calls. In that case you will get a credit of 5000*$220 for the called away shares but in order to restore the position you will need to spend in the case of QCOM a minimum of 5000*$250 or so to buy back. You stress that this is unlikely though and in your case I guess there wasn't any time for the shares to be called away.

Just trying to understand as I have not dabbled in options yet but the capability to manage risk seems very useful.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News