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Non-Tech : Paired Trades and Hedging Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (33)	12/2/2004 2:13:23 PM
From: Sam Citron	Respond to of 136

Here's the problem with the new law, so far as I understand it. Say I want to write a qualified covered call on WDC. WDC is now at 10.30. It closed yesterday right at 10.30. There is just no volume in any strike above the 10. Under the old law I believe the 10 call was close enough to have been a qualified covered call. Under the new law it is not. And the next strike up the chain is almost 25% out of the money, thus not very interesting. The fact that the 10 covered call may not be "qualified" affects not just the tax rate on the underlying stock's dividend, as pointed out in the article, but it also affects whether the holding period of the underlying stock is tolled for determining LT capital gains treatment. Sam