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Technology Stocks : Compaq
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To: Piotr Koziol who wrote (89032)1/22/2001 11:43:19 PM
From: Andreas   of 97611
 
Piotr;

Interesting post. However, if dell has been selling puts (as the post states), and the price of dell stock has gone in the toilet (which it has), it is very likely that (depending on the strike price) dell will be stuck buying a bunch of stock at prices exceeding current market price on date of put expiration. The poster is correct that no loss is recognized at that time. However, if dell chooses to preserve cash and buys back the puts instead (at higher prices since dell stock is in toilet) then a loss will be recognized. Interesting choice, (i) preserve cash and take loss on put transaction or (ii) burn a lot of cash but avoid loss recognition.
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