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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Mike da bear who wrote (1917)	2/22/1999 12:24:00 PM
From: Colin Cody	Read Replies (2) \| Respond to of 5810

Mike, I'd look at the puts like an "insurance policy" and consider the money spent a wise, conservative approach. If you happen to get $3,000 a year as a tax write-off, so much the better. If you want to HEDGE that insurance bet and maybe offset the "wasted" tax benefit (of the tax loss in excess of $3,000) you could purchase far out-of-the-money CALLS. Then if the stock goes way up and the puts become worthless, the calls will be going into the money and their gain will work to your advantage. Another play is to WRITE call options at-the-money (or a little bit out-of-the-,money) in addition to the above. The cash received can be used to by the out-of-the-money calls and the taxable gains (if any) might offset the put losses. You might technically be "naked" the calls, but if you have dibs on the stock via the option (at a moment's notice) then you are not really at risk here. You just are giving up some of the upside potential. Colin