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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: STEVE who wrote (40633)3/1/2000 11:42:00 PM
From: Alski  Read Replies (1) of 45548
 
Steve,
If you've been in 10 months and you think COMS is going to spike and then fall back that would be a perfect scenario to sell covered calls. Depending on the exact date you bought, either Aprils or Julys, (Mays would be perfect but COMS isn't on that cycle).
You get to take some cash off the table right away. If COMS is below the strike at expiry then you get to keep the cash. You'll pay short term on the proceeds from the calls but you'll get to keep your COMS.
If it's above the strike you'll sell your COMS at the strike and get to take long term cap gains. Tax treatment for exercised covered calls is to reduce your COMS basis by the proceeds from the calls, but the holding period is when you bought COMS in the first place, so you get long term cap gains treatment on both your COMS and the calls.
FWIW...Alski
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