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To: Kayaker who wrote (32566)6/18/1999 6:46:00 AM
From: Morgan Drake  Read Replies (2) | Respond to of 152472
 
Commissions on the exercise would be about $40-$50. If I exercise now and the stock goes to $150 over the next month, I've generated another $600,000 in margin borrowing power, which I will not have if I don't exercise (option holdings, no matter how deeply in the money, have no margin power).

If I sell the options now, I'll have a $1.16 million short term capital gain tax to pay buy July 15. If I exercise and hold the stock, I will have deferred the tax and it will eventually be converted to long term capital gain.



To: Kayaker who wrote (32566)6/18/1999 9:57:00 AM
From: engineer  Respond to of 152472
 
If you sell the options you pay taxes at income levels. If you hold then you pay at Cap gains IF you hold the stock for an additional year afterwards. This is ALOT of omeny and holding the stock is well worth the effort, using small portions of it to satisfy any margin calls that come up in a year.


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