Shawn Healy bought 300 shares of Apple Computer common stock at $132 a share. Fifteen months later, in December, Apple was up to $147 a share and Shawn was considering selling her shares, because she believed Apple's price could drop as low as $142 within the next several months. What advice would you offer Shawn for locking in the gain and deferring the tax to the following year? Explain.
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Part 1
Which of the following trading strategies are suitable for Shawn to lock in the gain and defer the tax to the following year? (Select all that apply.)
A.
A sale of a deep-in-the-money call option.
B. A put hedge.
C. A short sale of the common stock.
D. A sale of an ETF.
E. A long straddle.
