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

To: RocketMan who wrote (56436)	12/23/1999 2:04:00 PM
From: Kayaker	Respond to of 152472

Poet's question was about rolling 2001 into 2002s, mine about rolling 2002s into 2003s, but it is the same question. Is there an advantage to doing that? Sure, if you plan to stay invested and not exercise the calls (buy the stock), you may want to sell them at some point and buy a later expiration. (If I were doing that, I might try to time the usual April market correction, i.e., sell the 2001s at the high and wait a few weeks to buy the 2002s or 2003s.) You have to pay the taxes on the gain though. The closer you get to expiration, the quicker the time value of an option decreases. I've often seen it recommended to roll to the next year about 6-9 months before expiration. In this time period, the deterioration of the time value starts moving faster. It helps to look at a graph of the deterioration of a LEAPS call to see it (it's a curve, rather than a straight line function). Generally, I usually buy LEAPS calls as far out as possible. They are usually not that much more expensive, given that you get an extra 12 months. I have some LEAPS calls (QCOM and GBLX) that I hope to exercise on expiration day since they are deep in the money (stock will be affordable) and I won't have to pay taxes until I sell the shares.