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

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

XPO 141.09

+0.7%

Dec 24 12:59 PM EST

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To: Casaubon who wrote (54)	8/23/2005 11:14:38 AM
From: VLD3	of 60

The literature by Samuelson, Merton, Black, Scholes, ad infinitum state that a "perpetual warrant" at all strike prices have the same price as the underlying. You don't have to go to the thinly traded, deep-in-the-money strikes to get maximum return - according to the academics. Is this correct? No, but that's a different issue. The argument for taxation of deep-in-the-money calls only applies when you have eliminated the risk of loss, such as a deep-in-the-money call in combination with the underlying (at a strike less than your basis in the stock). If the financial outcome is uncertain, it is not a taxable event since you cannot state for certain whether the outcome is a gain or a loss.

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