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.

Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: IKM who wrote (5148)	12/29/1997 1:49:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 27307

IKM: why in the world would someone open a position 29 points in the money? There's little of the leverage and all the decaying time risk of options ... That far in the money and with little time premium, the option is the stock. In any case, whether it was "sell to open" or "sell to close", the seller would appear to be bearish. What could the buyer be thinking, unless they wrote them at $10 and have run out of money with which to ride it out? Barb: I never let the tax tail wag the dog. Especially on a volatile stock like Yahoo!. I'd rather pay the taxes on a locked in gain than put off paying the taxes on what could end up substantially less. My guess is that, by writing these options, someone is having their cake and eating it too. You can't defer taxes with a short against the box any more, so write deep in the money calls. Bob

To: IKM who wrote (5148)	12/30/1997 1:49:00 PM
From: IKM	Respond to of 27307

* << why in the world would someone open a position 29 points in the money?>> Shows you what I know. The open position increased by the 1110 contracts traded yesterday. It seems a way to use a bit of leverage. Was it a sale? If so, a bearish signal. But I've no way to know for sure. One reason for selling the contracts short could be a desire to short without the risk of having short shares called in, or just a lack of shares to short. The option could be exercised, but not likely. Maybe there are underlying share to cover, before selling, which will depress the stock price and lower the repurchase price of the calls. That trade yesterday was for over $3 million.