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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (4787)	4/11/2000 9:09:00 PM
From: MrGreenJeans	Read Replies (1) \| Respond to of 4969

Collar Question When putting on a collar selling calls to finance puts to protect an equity position is it not true that the put strikes and call strikes have to be 10% to 15% away from the price of the equity being protected? In other words, does the IRS consider this a taxable event if these parameters are not adhered to because then it is not viewed as a hedge but a viewed as tax avoidance? In a recent Barron's article a month ago, in the Strike Price column, it was suggested that a position such as the following was legal: XYZ Stock = 72 Put=70 Call=90 It would seem to me this would be an illegal position if the aforementioned was true or a violation of IRS rules since the put is less than 10%-15% away from the price of the stock.