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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Morgan Drake who wrote (32400)	6/16/1999 1:22:00 AM
From: Jon Koplik	Respond to of 152472

Morgan - this is what you would put in (to roll one's covered calls) : options order, spread order. Buy 22 (?) QCOM Jun 95 calls to close Sell 22 (?) QCOM Oct 95 calls to open at a net credit of $11 1/8 on the spread. Jon.

To: Morgan Drake who wrote (32400)	6/16/1999 1:24:00 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 152472

>>I would first have to come up with the cash to buy back the previously sold options before I would be permitted to sell new calls on my existing stock holdings. Morgan, if you are dealing with more than 5 contracts, Fidelity will perform a roll out transaction, where they buy back the covered call and resell the new series at the same time. The only money you have to come up with is the differential between your sale price for the new cc and the price you paid to re-buy your old cc. Frank

To: Morgan Drake who wrote (32400)	6/20/1999 3:13:00 PM
From: Geoff Nunn	Read Replies (2) \| Respond to of 152472

Morgan: When guys have sold options which are now deep in the money, they either redeem the options (with cash) or they let the stock go. I would never go back into the market and buy stock to cover a previously covered call sale. Never??? I think your view is completely wrongheaded. If you've written call options which are deep in the money, entering into the market and buying shares of stock for delivery may be a lot less costly than redeeming the options. Simple arithmetic proves this. If you buy shares of stock, the brokerage and MM costs are likely to be peanuts compared to what it will cost you to redeem the options. Your main hit on an options trade is the bid/ask spread. These spreads dwarf (in percentage terms) the b/a spreads normally seen on stocks. The commission paid to your broker is also likely to be less (as little as 1 cent/sh on stock transactions at some online brokers) if it's a stock trade. In addition to the savings in transactions costs, you can also reduce your capital gains taxes by buying shares for delivery. If you buy shares in the market, the cost basis will be the market price of the stock. This of course will be higher than the cost basis on the shares you already own. How many shares you need to buy at assignment, in order to avoid paying capital gains taxes, can be computed mathematically. Even if your call options are fully covered, you're still generally better off to buy some new shares in the market. When these are delivered along with some - not all - of the shares you already own, this is how you go about reducing your capital gains tax.