Expirationless Options (XPOs)- The Next Big Thing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Expirationless Options (XPOs)- The Next Big Thing

XPO 141.09

+0.7%

Dec 24 12:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: VLD3 who wrote (27)	7/8/2005 10:33:36 PM
From: Tech Master	Read Replies (1) of 60

"So if the XPO sells for a significant percentage of the underlying, never expires, and the income is non-taxable, wouldn't anyone facing a taxable gain on a stock sell the (deep-in-the-money) XPO call instead? If its a dividend paying stock, its a win-win. You keep the equity, keep the dividend, the equity hedges the short call, and you get a tax-deferred income - plus, if the option is ever executed, you get paid again (the strike price) for delivering the stock you've already been paid for once (and the strike should be selected to cover the future taxable gain, and this max should be known at the time you enter the transaction)." Why wouldn't you sell a few more out of the money calls instead of a deep in the money call? I'd think that the exercise risk would be less for the out of the money calls vs. the deep in the money call. Am I missing something in your comment above?

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next