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Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Herschel Rubin who wrote (322)	3/22/2000 3:00:00 AM
From: RoseCampion	Read Replies (2) \| Respond to of 355

Hersch, I am almost certain you cannot sell your call, buy the stock, and pretend for tax purposes that it's the same as an outright exercise - even though your portfolio ends up looking the same in both cases. In this case, you just can't "have your cake and eat it too". You've got to give up the premium or ride the calls out until they're only worth their intrinsic value; a "self-exercise" is emphatically not the same as a true exercise performed through the broker. However, you could conceivably exercise your call option, get the stock, and then immediately turn around and sell a covered call against those same shares - effectively recapturing at least some of the time premium. (As well, of course, as taking the risk the stock will keep rising beyond the covered call's strike price which would put you in danger of losing the shares and generating an immediate taxable gain - no free lunch there, either.) Even if you weren't called out, though, any profits from the covered call would be taxable as a short-term CG if it expires before the end of the year. -Rose- PS - this might be better answered on the tax thread: Subject 17266