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.

Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Trebor who wrote (3582)	2/22/1998 1:47:00 PM
From: MrCash	Read Replies (2) \| Respond to of 42834

With my VERY low cost basis in Intel, IBM, HWP, AMAT and Msft, I would consider selling covered calls when their valuations get too lofty but I hear that this will make you take a capital gain on the stock and readjust your basis. NOT something I want to do - adjust my basis up 2 to 6 times and pay taxes! Anyone know for sure the tax implications of doing this? regards Kirk out

To: Trebor who wrote (3582)	2/22/1998 11:03:00 PM
From: Mark Pritikin	Read Replies (2) \| Respond to of 42834

<<For my part, I'm sticking to my strategy of holding Intel long term. When it gets to what I consider overvalued, I sell covered calls against part of my holding. When it dips to what looks like a buy point, I either buy back those calls or let them expire worthless. I've never heard Bob discuss this strategy in any detail but it has worked very well for me>> Of course, the risk to this strategy is that you sell covered calls and the price continues moving up and your stock is called away and your out forever! This can happen when you look at the PE and think its too high, but then INTC pre-announces better then expected earnings (or has a blow out qtr) and suddenly the valuation is not out of line. Seen this happen a few times before and for that reason, do not play games with covered calls. Some who do, choose to go way out of the money (Jan 99, 120's to minimize the risk of losing the stock on a big short term move up). Good luck!