Even with the S&P 500 heading into the homestretch of 2002 at a full gallop -- the index is up some 20% since Oct. 8 -- it's still down 18% for the year. Unless the index can tack on another 22% in the next three weeks, we will have officially booked the third-consecutive losing year. But before you tear your brokerage statements into New Year's confetti, take a close look at your holdings. There may be something to cheer about after all. We ran a simple screen looking for stocks that have gained 40% or more over the past 12 months, have a current price above $30 a share, a market capitalization of more than $500 million and an average daily trading volume above 200,000 shares. And, of course, options must be available. As it turns out, quite a few names paid off quite handsomely. Among them: Hotels.com ( ROOM), up 121%; Coach ( COH), up 112%; and Dreyer's Grand Ice Cream ( DRYR), up 95%. For a complete list of what the screen produced, click here. If you own some of the names on the list, you might feel like it's 1999 all over again, but there is one difference -- this time you (hopefully) know there's no shame in securing profits.
Take the Money, Don't Tell the IRS ... Yet
We've all read how executives sometimes "enter into a series of complex forward sale agreements" designed to "hedge a pre-existing (that's redundant, right?) equity stake" or something of the sort. The truth is, it's not very complex, and any shareholder of record can do it. It goes by several names, such as a risk conversion, a fence, a combination, or, my preference, a collar. "It" is a very straightforward three-piece position -- long stock, short calls and long puts. The benefits are twofold. You can lock in profits without actually selling any shares, and thereby defer capital gains taxes.