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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: FaultLine who wrote (510)5/10/2001 8:39:08 PM
From: BDR   of 5205
 
<<Can you or can you not completely ignore the basis when you go into a cc transaction? >>

I do ignore the basis, if I write a covered call. If it is important to me to not recognize a gain or loss by the expiration date then I should not write that call because that is what I am contracting to do and it is always a possibility. Actually, I suspect I would be more leery of being called out at a price above my basis than below because I am then creating a tax liability (assuming no other losses which is not the case this year). I can carry losses forward but I have to pay for gains in this tax year.

My biggest losses on options have occurred when I have bought back expensive calls in order to avoid being called.
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