This is my first experience ever in a situation as incredible/mad/magical as this. So I'm only telling you what Voltaire said, and it's only about January calls. Right after the split nobody knows what will happen but there will be four times as many calls and four times the liquidity. It's possible the average investor will rush in (especially after this Paine Webber target) and the fun will go on. But notice CMRC retraced a lot today. So it's also possible that the stock will be extremely volatile, and go down some. And realize that Jan 400s will be Jan 100s, and let's say...well...god knows, but let's say the stock is at 150 on Jan 1. (or 2 or 3...whatever that Monday is) It doesn't have to drop a lot to make those 100s go down...and if there's a stampede to sell...MMs can also trade them in a "fast market" separate from underlying, and somewhat fix the prices themselves. Thus, let's say on a volatile trading day QCOM retraces 50 points, just a # I'm picking. It's down to 100. Well multiply that by 4...it would be like it dropped 200 points today. So, think what would happen to the Jan 400s if that happened...what they'd be worth...and pushed down a little further by lots of selling calls.
Thus, Voltaire was suggesting if you don't care about tax liability sell now (or tomorrow actually)...if you do care, get out as soon as you can on Monday. He could be wrong...but it's self protective just in case
Other months, don't worry about. |
