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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Casaubon who wrote (65146)	12/23/2000 10:40:31 PM
From: Zeev Hed	Read Replies (1) of 99985

Casaubon, quite possible, those guys had options at $60, when th stock was $120 they exercised the options, but had to borrow to exercise these, and the broker was quite happy to lend them the money, when they exercised the options, they had to recognize a gain, or at least some of that difference was "credited" to them as compensation (and reported as such to the IRS), they did not sell enough at $120 to cover their debt and now the stock is sold from under them at $40 (the margin man calling), while they can take a deduction of $3000 on their loss, they still need to pay taxes on their "recognized" compensation, and that might be much greater than the $3000 cap loss they can recognized (if they did not have other compensating gains). Zeev

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