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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 171.02-1.5%3:59 PM EST
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To: tekboy who wrote (56110)12/22/1999 8:04:00 PM
From: gdichaz  Read Replies (2) of 152472
 
tekboy: Jill, Poet and Uncle Frank are much more expert in LEAPS than I am. As are many others on this Q thread of course. My only experience was buying out of the money LEAPS in late 1997 for expiration in Jan 2000.

My idea was to buy them as far up - out of the money - as was available then for the longest time period available - over two years.

This meant they were the cheapest possible in terms of highest strike price so I could buy more than I could at a lower strike price.

Also by having them over two years out meant that if I sold them close to expiration (late 1999 - and later has been better of course - still have some BTW) I would be able to use long term capital gains. If I exercised, then I had a claim on lots of Q shares for a two year period without much money tied up. And selling some helps pay for exericing some, at which time having long term capital gains beats paying short term capital gains.

Suggest you give this some thought along with other alternatives.

And none of this is all or nothing.

Some way out of the money 2002's now and some similar way out of the money 2003's when they become available in the spring of next year might be an interesting combination in terms of bang for the buck.

Again do not pretend to be an expert in this at all.

Others much more experienced.

Caveat emptor, etc. But thought you might find this experience of some interest.

Needless to say, the results of letting my LEAPS run over the 1998 and 1999 time frame has been good.

With data coming in a major way in 2001, the 2002 LEAPS could cover that period rather nicely IMO. And the 2003's even more so.

And whether in the money or out depends on your risk tolerance vs safety.

DIM is an alternative to buying the common - lease purchase so to speak.

Higher strike prices probably only make sense with a stock such a the Q where the future (and potential stock price appreciation) looks very very very good. (to use Dr J's emphasis from another context) and where you are rationing your resources going in.

Best as always,

Chaz a.ka. Cha2
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