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Strategies & Market Trends : Options
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To: codawg who wrote (611)1/3/2000 9:19:00 PM
From: taxman  Read Replies (1) of 8096
 
i'm not a regulation t expert but on what i've seen so far i agree with you first paragraph. If you have $100k worth of MSFT in your margin account and no cash you could buy up to $100k of CSCO.

however i do not agree with paragraph 2. to me that is the same as saying that if you buy csco in the morning for 100 and it doubles to 200 by the close, you are entitled to a free ride. as i have said previously, under regulation t, you cannot borrow more than 50% of the purchase price which is the exercise price in the case of an option exercise.

in any event i called the federal reserve in san francisco and they promised call me back to let me know how regulation t would apply to option exercise.

regards

bizwizbang.com

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