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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Sarmad Y. Hermiz who wrote (220212)	12/13/2006 12:00:28 AM
From: Biomaven	Read Replies (1) \| Respond to of 275872

think the exercise of options that are in the money triggers a tax liability to the person exercising Depends if the option is a NQ or an ISO. But ISO "buy and hold" (which triggers no tax liability) is severely limited these days by the alternative minimum tax (AMT). So in practice, even with ISO's, employees are forced to sell the same year as the exercise (a so-called "disqualifying disposition") which forces tax on the spread, just like a NQ exercise. Exercising and holding the net resulting shares after paying taxes is relatively rare - I'd say under 10% of all exercises. It gives up some leverage and the time value of the option, so it's normally not a great strategy, but it can be viable if you believe there will be substantial upside over the next year because it does save tax if you hold until the gain is long-term. Peter