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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 72.11-0.3%Nov 5 3:59 PM EST
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To: freeus who wrote (20423)1/7/1999 5:28:00 PM
From: Gerald Walls  Read Replies (2) of 77397
 
I have a cisco leap which has tripled...its a strike price of 65. I am inclined to just exercise it and get the 100 shares. Does it make more sense to do that, or to sell it (eventually) take the profit (sans taxes because its a taxable account) and buy back in on a dip sometime?

If you still have it close to expiration and there's little time value remaining and you plan to hold the 100 shares for the long term then exercise as the profit on the LEAPs will roll into the CSCO shares and no taxes will be due. If you plan to sell the CSCO the same year then you may as well sell the LEAP. If the LEAP has a ways to go yet until expiration they you'd probably lose too much time value by exercising so you'd sell.

Of course you could always take some profits by rolling the LEAP to a higher strike which will be cheaper but then you still owe the taxes.
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