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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: garyx who wrote (18132)	2/16/2000 12:52:00 PM
From: Uncle Frank	Respond to of 54805

>> With LEAPS, aren't you paying taxes on your profits? Or is it better to exercise them, and actually buy the stock? Has anyone looked at comparing the leverage on LEAPS vs the negative effects of taxes? I know Uncle Frank was looking at how best to do LEAPs, but he also said something about all his stuff being tax-sheltered (would like to know this too) Hi, garyx. Yes, you will pay taxes on LEAPS when if you sell them for a profit, unless you hold them in an IRA or some other sheltered account or exercise them. But unlike their shorter lived cousins, LEAPS can be held long enough to qualify for long term capital gains, which reduces the tax bite quite a bit depending on your tax bracket. DIM LEAPS offer you about 2.5:1 leverage over holding the common. I'd highly recommend the book, LEAPS by Harrison Roth. It explains the proper application of LEAPS Replacement Therapy, which is apparently what you are considering. Roth describes it as a way to take profit and capital out of the market while still participating in strong upmoves, and characterizes it as a low risk strategy. uf