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 : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (40626)	12/21/1998 7:15:00 AM
From: rupert1	Respond to of 97611

rudedog: A few years ago I used Merrill Lynch (London) to handle all my option plays, as well as a fairly sizable stock portfolio. I used their research for my bigger stock plays with Schwab. It was a lazy way of doing options. The consequence was that I frequently lost the benefits of my stock picks, when the stock took off. When I did make a nominal profit on my options, I noticed that ML was doing proportionately better in commissions than I was doing in net gains. I also noticed that anxiety over my option positions and deadlines was disproportionate. So about four years ago, I stopped doing options, transferred everything to Schwab and adopted the practice of moving in and out of stocks in large, concentrated blocks. (At one time I owned more BAY than any of its Directors!) This proved successful. However, I am not very good at it if the stock is in a general down trend. It works better for me when there is a strong upward current and I am immersed in the stock and have confidence in its upward direction. In these cases, if I do sell and miss the bottom of a temporary dip, I can always curse and jump back in at market in the knowledge that I'll make money anyhow. I think CPQ is a perfect opportunity for this strategy. I selected it before joining this thread, but contributors to this thread have reinforced my judgement and your postings have been very valuable in giving me a a sense of the fundamental technical underpinnings of the company's performance. Given the very positive prognosis for CPQ, I think I may be tempted to return to options and am currently considering this for the New Year. Perhaps we can postpone the conversation until then. To answer your question directly, I think there are others on the thread who can advise you better on options than I can; as for taxes, my address for tax purposes allows me to trade without concerns about capital gains tax. I don't know what the US laws are but venture to guess from general knowledge that you would be liable for capital gains tax in the situation you describe.

To: rudedog who wrote (40626)	12/21/1998 11:02:00 AM
From: robbie	Read Replies (1) \| Respond to of 97611

rudedog, if you sell the Feb80 calls your stock will only get called if DELL is over 80 at the expiration date (technically the close of the market on Friday, February 19th, although they officially expire on Saturday the 20th.) Here is a must read for anyone interested in options, compliments of steve (hpeace): techstocks.com If your stock gets called it is no different than selling the stock at the strike price you are called at - and the applicable capital gain holding periods and rates apply. You do have more flexibility though - for instance, if your stock is going to be called and you think the stock has some more to run, you can simply buy back the calls (at a loss, presumably) and write more out into the future. And most times this practice won't actually require any new cash. Here is a link to check option prices: cboe.pcquote.com The Feb 80 call was 3 1/8 earlier this morning. $150k in your pocket for agreeing to sell your Dell by Feb 19 for $80 isn't too shabby!! But you have to be the type of person who wouldn't be upset if Dell is 100 by then. If you think Dell will be "well below" 80, then maybe you could sell one of these: Jan 70 - 4 1/4 this morning Jan 75 - 2 1/8 Feb 70 - 7 3/8 Feb 75 - 5 1/8 Remember too, since you think DELL will be way under 80 in Feb., if you sell any of these calls and the stock tanks, you will be kicking yourself for not simply selling your shares at these levels. Hope this helps, our ledger is way out of balance in your favor !!! Robbie