SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : All About Sun Microsystems
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Carl Wysocki who wrote (7863)2/22/1998 11:09:00 PM
From: Hugh A. McWhorter   of 64865
 
Carl--I believe you said a seller of a covered call cannot get long term capital gain treatment. I said you can get LTCG if you sell a leap (same concept as call just runs for longer period of time). If calls (by definition instruments with a nine month or less life) are sold, clearly they cannot get long term capital gain treatment because you have to clear 18 months to get that. McMillian states that you can only get short term treatment on a call sale. The copyright of my McMillan is 1993 and to get LTCG treatment at that time you had to clear a year. It does not discuss leaps which, as you know, can run for multiple years or periods of time in excess of 18 months. Sell a leap for a two year period of time, have it expire and you have a LTCG.

The easiest way to keep this straight is to ask yourself the question is a leap a capital asset. Assuming you are not a professional trader or a broker dealer the answer is yes. Sales of capital assets get capital gain treatment--> 18 months LTCG.

What I pasted is from IRS Pub. 550 to be used in preparing 1997 returns. Seems to speak directly to the wash sale rule and its application to option positions. Show it to your tax guy and see what he thinks.

I guess the best calls to write are the ones that work. $1.25 for a $55 call with only 3 months to run when the stock was below $45 worked for me. After expiration of calls I always wait for a run and then sell out of the money on SUNW. Nice way to snag some extra bucks yet still be positioned to take follow up action if a significant run in the stock occurs.

Best regards, Hugh
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News