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Technology Stocks : 3Com Corporation (COMS)
COMS 0.00130+1,200.1%Nov 7 11:47 AM EST
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To: Roy Glen who wrote (40513)3/1/2000 2:39:00 PM
From: Danny  Read Replies (2) of 45548
 
Roy, mathematically, you are right. But the real reason to
buy puts here is not because of the fear that COMS will go
down, but because of the fear that PALM will continue to
go up in the next 3-6 months.

Let's say your COMS shares will become long term position
in 3 months. If you sell your COMS now and buy them back
later (hopefully you could) at cheaper price. The second
position will not be a long position 3 months later. So,
you have to pay 35-40% tax on all your COMS shares.

But if you buy put. You pay 37% tax on the porfit you make
on put, but you will enjoy a mere 20% tax on all your COMS
shares 3 months later, and even on your PALM shares if PALM
is going to shoot to above 200.

They key here is to assume COMS (really PALM) will be one
of your long term positions and you believe PALM will
grow higher in the longer term. Otherwise, there is no
other way better than selling everything you have today
if you believe this is the TOP.
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