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Technology Stocks : CMGI What is the latest news on this stock?
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To: LarryCPA who wrote (15210)12/26/1999 1:32:00 PM
From: PAL  Read Replies (1) of 19700
 
Leaps held for over 1 year would be long term.

I presume you mean if you are a holder of the LEAPs . However if you are short (writer of tre option), then they are ordinary income when they expire worthless or when you close the position.

When a person writes LEAPS and it is exercised or assigned, then the premium is added to the selling price of the stock (call) or used to reduce the cost basis (put). In this case the holding period of the stock determines whether it is long term or ordinary income.

In Summary: Shorting a LEAPS will always be either Short Term or when assigned/exercised, has no bearing in the holding period since it is incorporated in the stock purchase price or selling price.

This above is the among the most misunderstood topic in the IRS regulations, however, we are fortunate to have an easy to understand explanation on this thread. I herewith refer to Disu's invaluable post:

Message 12383044

Best regards

Paul
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