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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Elmer Phud who wrote (178414)	6/26/2004 7:32:18 PM
From: Ali Chen	Read Replies (1) \| Respond to of 186894

"I buy 100 Shares @ $20 and sell a $20 CC. Later the call is exercised and I deliver the 100 shares at $20. I neither make or lose anything on that transaction, premium not included in this calculation, regardless of the current share price." This is getting ridiculous. "Later"(today), before the call was exercised, you were an owner of 100 shares, or 100@30= $3,000 worth. You "deliver" 100 shares @20, you lose $1000 (minus premium which you agree not to include for the sake of simplicity). If you didn't gamble on that CC, you could be a proud owner of 100 shares worth $3000. You could sell them and have $3000 cash. Now you have only $2000 at your hands. Are you really that "distorted", or what? "If I buy more shares @ $30 it doesn't change the first transaction." Sure I agree, it doesn't change the fact that you just lost $1000. Maybe you are confused with the global term "transaction"? When you bought your shares and sell a CC, you didn't complete the "transaction". The transaction gets completed when the call is expired, that's when you need to count your gains or losses. One more attempt: you said "I buy 100 Shares @ $20 and sell a $20 CC". Ok, what if, as it is for company option plans, the vesting period is several years? It is a long period for investing, and you already sold, bought, and sold again your shares (for whatever reasons). Now the call is exercised, but you don't have the shares. Effectively you go buying 100@30 with $3000 cash, get back only $2000 as per agreement, and lose the same $1000. What else could be any less clear than that? - Ali (probably I also better go talk to flowers...)