I am very interested to know the strategic intent of your transaction. Why did you sell Jan 7.50 calls? I've been trying to hypothesize why you would do that unless you expected ARIAD's stock price to decline below 7.50?
I'm not criticizing Im just tring to understand what I'm missing. I have a couple of questions.
1. Will you treat the proceeds as taxable in the current tax year? Im a little rusty on this and don't sell deep in the money calls but I thought the sale of deep in the money options with expiration dates in a different fiscal year can trigger current year income tax consequences. I don't think there is a bright line on deep in the money but doesn't this trade expose you to potential current year tax consequences?
2. The options you sold have vitually no premium because they are so far in the money. Unless you think this provides you with some tax inecentive or that the stock will nose dive, why wouldn't you sell options that aren't as deep in the money. You would then collect a greater premium and would have a smaller likely hood of having the Ariad Calls exercised.
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