Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jan Crawley who wrote (39413)	12/27/2000 8:22:52 PM
From: Louis V. Lambrecht	Read Replies (3) \| Respond to of 42787

Jan - always hard to tell with options. You should be at the pit to know what happens. :-} Not a tax specialist, but as far as I know, the trade day is the reference day, no matter when (or even if) it settles. Also, traders (and you would expect that sort of money to be in the hand of traders) have another IRS rule: instruments are considered to be plain inventory. As in any business. I don't know if funds are considered as traders for tax purposes. It is my understanding that traders could want to cash some profits this year (buy selling far out of the money puts). On the other hand, I don't see any advantage to pay huge premiums for far out of the money puts. You would have a better return shorting YHOO outright ($30) than buying puts ($180). So, I guess these volumes are from someone selling the options. (Banking free money and eventually closing a short equities position for free). The other party, a MM or a pool of MMs, have to pay real money. And they are not a charity. Hence, these MMs will revert that position into the market in order to have a neutral portfolio. How they do this is beyond my understanding of MM's business. Answer must be in tax and risk management somewhere. But I don't know how this could affect the share price.