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Strategies & Market Trends : WR's Momentum Trades -- Ignore unavailable to you. Want to Upgrade?

To: ChrisJP who wrote (9719)	3/17/2001 9:25:38 PM
From: Lola	Read Replies (2) \| Respond to of 11130

Hi Chris, I recall reading an article about someone that worked for Microsoft and took out a mortgage on their house to exercise their stock options making their stock portfolio of MSFT worth over $1M from options they exercised that year ... then the stock tanked and they were in deep doodoo as they were stretched to the max on margin not to mention the tax they had to pay for that year from income they were deemed to have earned from exercising the options. Unfortunately when it came time to pay the tax and cover the margin calls the end result was they lost everything and still owed money because the stock had fallen 50%. Combine margin with exercising options with this weird US tax regulation and you have a recipe for disaster if the stock falls quickly. A smart person would have sold some as soon as they exercised the options but this person got greedy and thought the market would never stop going up ... they bought at the top by the way ... figured they would get super rich and retire from the company ... instead the complete opposite happened. Lola:)