1) If any of you discuss the marginability of LEAPS with Fidelity, please post the result of your conversation. 75% of my Fidelity portfolio is in LEAPS, and I would love to have some margin power with them.
2) Are there any tax gurus our there? Question: I have 10 Intel 50 calls which will expire on Jan 21st. I have held them since November 1997 (I bought them when they were LEAPS). If I sell the options, the gain is treated as long term, since I have held the option for longer than a year. If, however, I exercise, and then sell the common in 2 months, is the entire gain from the sale of the common considered a short term gain (since I have held the common for less than a year)? As of now, the option is worth $32, and my basis is $5. Thus, if I sell on Monday for $32, I have a $27,000 long term gain. If I exercise the option and then sell the common for $82, I will also have a $27,000 gain (82 minus 55 (the strike price plus the cost basis of the margin)). If the sale of the common is treated entirely as a short term gain, then I suffer the tax consequences. This seems harsh. Intuitively, it seems to me that I should have short term gains for only the amount above the $27 gain. Does anyone know the answer to this question? TIA. |
