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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: FR1 who wrote (4096)	1/10/1999 11:53:00 PM
From: Moose	Read Replies (3) \| Respond to of 29970

The options must be cashed in and are treated as a cash payment to you. I didn't know about the tax burden. I'm not sure I care, since this is a leverage play for me. I actually own a bit more than 2x of actual ATHM stock versus ATHM Leaps. I bought the leaps 'cause I couldn't afford anymore stock! I don't mind the swings - easy for me to say now, since I have a comfortable margin over buy price. Just for fun, lets do the math: Let's say I have 10k to play with. Where will I be in 2001 if I buy leaps vs. stock. My assumption is that this stock becomes a 16 bagger in two years - I think it will double 4 times in that period. Stock 10k buys me 100 shares. In 2001, I have 1600 shares worth $160k and no taxes to worry about. '01 Leaps 10k buys me 20 Jan100 ('01) contracts or the right to buy 200 shares. That 200 turns into 3200 worth $320k of which I need to spend $6.25/share on (split adjusted), or 20k. $320k - $20k = 300k profit with a tax burden. What is that anyway, about 40%? If so, I end up giving $120k to Billy and keep $160k. Hmm... am I doing this right? I guess it's a wash then if you're right about the tax burden. -Moose