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Pastimes : Home on the range where the buffalo roam
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To: kanuti who wrote (6721)11/12/2000 10:22:14 PM
From: Seldom_Blue  Read Replies (1) of 13572
 
I had to make a similar decision when I wanted to cash out of a position. I bought NTAP at 71 and a week ago I wanted out.

Since I had mucho capital gains tax to pay already, I really did not want to incur any more. I sold Feb. 70 calls (DITM) with almost no time premium left. I also bought Jan02 70 puts for about 10. The stock was trading at 120 at the time I did this.

Bottom line: I sold the stocks at 110. I will not incur any gains or losses until next Feb. And I feel much better with cash in my pocket.

Bad part: The stock went down as I expected. But the calls did not go down as fast as the common, of course. It will be a problem if I want to reenter the stock, because I cannot buy back the calls without paying a time premium. I guess if I sense the stock is bottoming out, I will just have to buy the common again.

Not the most elegant way, but serves my purpose at the moment.

Seldom Blue
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