Twin Mining (formerly Twin-Gold) Message Board

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Gold/Mining/Energy : Twin Mining (formerly Twin-Gold)

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To: VAUGHN who wrote (53)	1/20/2002 1:30:42 PM
From: bill	Read Replies (2) of 613

Nice article in the G&M a couple of days ago about options and why they should be sold as soon as exercised. If the owner excercises and option at 1.00 and the stock is 1.50, then the income tax people want their share of that. If the option is sold immediately, no problem. The cash is in the account. However, if the option is exercises and the stock is not sold but held and the price of the stock goes down,the owner has a problem. The income tax dept. still wants its money (it treats this as income) but if the owner sells the stock now for .75, the .75 loss is a capital loss and can only be claimed against a capital gain. The owner gets hit twice. Once with income tax due and once with a capital loss that can't be offset (unless he has other capital losses). To the rest of you on this board this may all be old information but to me it helped to explain why holders of options exercise them and immediately flip the stock. Of course, if the owner thinks the stock price is heading up, he can simply hold the options without taking on the risk of exercising and then having the stock price fall.

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