The New QUALCOMM - Coming Into Buy Range Message Board

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Technology Stocks : The New QUALCOMM - Coming Into Buy Range

QCOM 176.67

+1.6%

Nov 12 3:59 PM EST

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To: thinkclear who wrote (1024)	8/21/2007 8:11:54 AM
From: carranza2	Read Replies (3) of 9129

Think of it this way: Since Paul's savvy use of options has given him a negative cost basis, the return on the dividend is much, much higher. My math skills are insufficient to calculate a rate of return on something which has a negative cost basis so I'll assume a cost basis of .01 for the sake of discussion. The rate of return assuming a nominal cost basis of .01 and a dividend of .56 is a phenomenal 5600% per year. In essence, he has 'bought' an income stream of .56 per year per share for less than .01 a share! I know it would be impossible to find anything safe which provides that kind of yield. If I were in Paul's shoes, there is no way I'd get rid of the shares so long as the dividend is safe. Getting rid of his shares now in order to get a better rate of return is simply not a viable alternative because he would have to find an investment which provides him with a better than 5600% rate of return, something which is only theoretically possible. Since he has a nominal cost basis of .01, the appreciation assuming a 37 share price is an even more phenomenal 370,000%. Hope the IRS isn't waching.

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