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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: WeisbrichA who wrote (14880)	1/21/1999 12:34:00 AM
From: J. P.	Respond to of 74651

<<Would you have been better off (including tax consequences) if you had bought MSFT ITM LEAPS at the beginning of 98? >> Good question. I'm personally not a big believer in LEAPS because I think the most effective and pure use of an equity option is to find an optimal leverage point with a minimal outlay of cash. This obviously involves some market timing. The profits are good enough to make the tax consequences the cost of doing business. In my way of thinking, if you're paying 20 dollars a contract for an out of the money option, the leverage is minimal and the cash outlay is great. Plus, I don't like leaps because you have to ride out market corrections, which I am very loathe to do with options. Also part of the reason that I've had so many series of options with Microsoft is that I'm a firm believer in rolling up options to take the profits off the table when the option is over 15 bucks/contract, despite the tax consequences. Heck, you know that when you buy and sell options contracts thousands of dollars slosh around depending on the movement of the underlying that day, and the speed and quality of the executions, so retrieving the money overshadows any exactness of the calculations of the tax consequences. Just my opinion.....