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Technology Stocks : Intel Corporation (INTC)
INTC 43.48+8.6%Dec 2 3:59 PM EST
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To: Jacob Snyder who wrote (56088)5/27/1998 7:43:00 AM
From: John F. Dowd  Read Replies (2) of 186894
 
1. You should get them at the ask. Problem is as you point out later th MM might change the ask and open the spread especially in a thin option. Use a limit. If you can but them slowly it is always the best way especially in a thinly traded option. You are trying to find the perfect world of how to buy an option as to whether to go limit or market. This depends on how anxious you are to establish your position and how thin the the trading in that option is? Regarding liquidity at time of sale there will always be a market for deep in the money options as they have real value. The premium will be a function of volatility and interest rates coupled with the time to expiration. Concerning the tax question re: conversion of option: I believe that the first transaction (conversion) is not taxable so the clock would begin once you take the latter position. I wonder though if their might be a more authoritative source. Try JK Lasser's Book.

In summary LEAPS are not a bad idea but they are generally thinly traded. Go into them slowly with a limit. At the end, if they are in the money, they will be worth the same as if you bought the stock plus a premium but this premium will be less than the one you paid going in. Check a tax manual on the cap. gains question. You can do this by browsing the web or the book stacks Borders or B&N or even your local library.

Question for you. Why are you bullish on INTC out through 2000?
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