Amazon.com, Inc. (AMZN) Message Board

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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 242.94

+1.5%

3:59 PM EST

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To: William T. Katz who wrote (759)	11/12/1997 4:53:00 PM
From: Oeconomicus	Read Replies (1) of 164685

Bill, they would buy a put and sell a call at strike prices a little below (for the put) and a little above (for the call) the current stock price. They are still at risk for movements between the two strike prices, thus allowing them to meet IRS guidelines and defer the gain on the stock until they actually sell it. The "zero cost" aspect of it comes in if the call premium offsets the put premium for a net cost of zero. The broker or some third party arbitrage player can take the other side of the option positions and short the stock, pocketing a small profit for his/her trouble. Or the other side can be a bunch of speculators buying calls and selling puts, but who would do either on this stock? The effect on the stock price is uncertain. If the other side is hedged, the shares do end up in the float. However, it appears that insiders are not selling which could help support the stock. Hope that helps. Bob

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