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To: Oeconomicus who wrote (5155)12/29/1997 2:46:00 PM
From: Peter Yang  Read Replies (2) | Respond to of 27307
 
I have a question for those who are good at options trade and hope I can get any help:
YHOO is selling at 67 1/2. If I short it at this price and at the same time I also sell March 60 puts at 6 1/2 (this is premium now). When It drops below 60, I'll be put and I can use the share to cover the short position and I make about $14/share (Not too bad for one trade). If it moves up from here I pocket the premium and sell puts at a higher strike price. Either way, it's much safer than going short only on this stock.
Sounds it's too good to be true, do I miss anything here? Thanks for any comments.



To: Oeconomicus who wrote (5155)12/29/1997 4:25:00 PM
From: Mama Bear  Respond to of 27307
 
>>>Barb, if a collar can both limit downside exposure and defer taxes, why would half a collar be a "constructive sale"?<<<

You need to check the new rules. A collar has been specifically defined to be a constructive sale. As always, consult your professional tax advisor for details.

Hey, was volume light today or what?

Barb


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