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Strategies & Market Trends : Canadian Options

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To: Benjamin Ng who wrote (1572)	4/1/2001 6:49:36 PM
From: Benjamin Ng	of 1598

Thanks for your replies. It sounds like there are still uncertainties regarding this matter (conflicting answers depending on source). Even Rev. Can. representatives will give conflicting answers. I guess the key is to document consultations with CCRA reps (time, date, name) in case of an audit. The problem about writing an option and collecting a premium is that I then have an "open" position despite the "disposition" of something (for which I may never have a corresponding "acquisition"). It's almost like short-selling a stock, whereby I sell some stock (resulting in an open position), and realize a gain/loss upon covering (closing the position). I still bear risk while the position is open, and I have obligations to maintain the position. Consequently the gain/loss is not yet realized. Perhaps the key is the "realization" of the gain/loss, and the time period in which that happens. If this is the case, my examples would result in capital gains in period 3 in both cases (during which the positions were closed, and the gain was realized). Is my reasoning sound, or can someone point out flaws? It's incredible how complex the Canadian taxation system is! Thanks, Ben

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