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Strategies & Market Trends : Options
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To: PAL who wrote (7647)5/6/2000 2:18:00 PM
From: Seldom_Blue  Read Replies (3) of 8096
 
PAL,

Two excellent posts in a row. Thanks.

One question: You mentioned that ALL short option gains are considered ordinary income. If I sell a LEAP call or put, close it in 1 1/2 years (not assigned or expired), then I still get taxed at short term/ordinary income rate? I had sold some LEAP puts with the intention that if they become profitable, I will close them to get the L/T tax treatment. I will now check with my tax advisers on this.

I have used the three legged method you have described with some success. Of course, from last Oct. to this March, I have gotten away from writing calls because of the unabashed bull market. This strategy may be good for the yo-yo market we are now in.

Except when I did it, I always sell the calls about 20% more than my stock buy price, and sell the puts 20% below. I feel safer that way, and can still participate if the market rises.

Seldom Blue
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