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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: PoetTrader who wrote (2240)8/26/2001 2:25:38 PM
From: Dan Duchardt  Read Replies (1) of 5205
 
Poet,

"One of the things I still keep in mind and believe to be true is the old joke about how the best way to make a small fortune in options is to start with a big one."

Translation: You are sure to lose money playing the options game :)

When I pulled up my Fidelity tax information for the year it showed the options as "Non reportable options sales"...what does that mean??? Are options taxed at some unique rate?

All stock sales must be reported directly to the IRS each year. You receive a copy of the 1099B from your broker showing all your stock sales, and if they are nice, an additional list of all your purchases. The IRS gets a copy of the 1099B directly from the broker. There is no similar requirement for options. The information you get from your broker about option sales is not sent directly to the IRS.

Options taxation can get pretty complicated. It's not that there is a different rate, but when you are writing against offsetting positions as you are with CCs, you have to know how to handle the profits and losses for tax purposes, either separately for stocks and options in some cases, or using option premium and transaction dates to adjust the cost basis or holding times of the stock in others. I'm sure others here know a lot more about this than I do, but here is a place to get an overview

cboe.com

Dan
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