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

To: Jack Bridges who wrote (46748)	10/31/1999 10:11:00 PM
From: Voltaire	Read Replies (2) \| Respond to of 152472

Jack, Have to respectfully disagree. No way you get clobbered unless called out or stupid enough to let expire. Reasons - 1. you still own your shares - any appreciation in stock is a Credit to your account, right? 2. You also sold calls that are appreciating which is a Debit to the account, right? 3. As long as the Credits (stock appreciation) out paces the Debits ( call appreciation) you are making money. 4. It is true that in the end you will need Cash to buy back calls but with the sale of the stock that is just a book keeping move because The Call position is always shown and figured in your liquidation value as a debit against your long position. Once Stock is sold and calls repurchased, the net is your account has increased in value. The key is that you need Margin in your Cash account in order not to encounter having to sell your stock causing the short term capital gain however in an IRA it does not matter, you are not liable for taxes at that point, simply sell the stock and buy the calls back and simply pay the commission and your account will have increased in value commensurate with the disparity in stocks appreciation over the calls appreciation. It is also important to remember the brokerage houses have to let you close your position if it is covered and you want to buy the calls first then sell the stock. The 95% is that you will not be called out. I think it is closer to 98%. thanks, ( not trying to be contentious) V.