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On December 10, 1980, petitioner's spread positions were
modified as a result of a recommendation from Klein that the
market was moving and that, by making additional trades, peti-
tioner could realize substantial tax losses and be in a better
position to later profit from the market movement. Short and
petitioner approved the trades that resulted in a substantial tax
loss on December 10, 1980.
On December 10, 1980, the three long positions (175 gold
contracts) established on December 1, 1980, were all canceled,
resulting in losses totaling $1,506,000. Petitioner's original
equity in his Hunter account, however, was not significantly
affected because the value of the three remaining short positions
dropped about as much as the three liquidated long positions.
The result was a total "open" profit that approximately equaled
petitioner's closed transaction loss. Petitioner's open profit
was protected by immediately replacing, on December 10, 1980, the
175 canceled long contracts with 175 new long contracts.
The new long positions established on December 10, 1980,
consisted of 75 contracts of March 1982 gold at $685 and 100
contracts of August 1982 gold at $739.70. The resulting position
in the account was an imperfect condor spread consisting of two
long outside wings of 75 contracts of March 1982 at $685 and 100
contracts of August 1982 at $739.70 and the body consisting of
two short positions, 30 contracts of February 1982 at $762 and
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