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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: andydaoust who wrote (3412)	2/25/2002 6:31:05 PM
From: Allen Furlan	Read Replies (1) of 5205

Andy and Dan, thanks for your input. My "Taxes and Investments" from CBOE is March 2000 but probably has not changed much. I forgot the 85% rule on qualified covered calls so my tax strategy is not appropriate for a 2.5 call sold against a 4 dollar stock. My reading though is that if a call is "qualified" and is closed and the stock is held past the specified expiration date, then the option qualifies as a short term loss. I am not quite sure how entering into another covered call write subsequent to the stock holding period alters the situation. This is sure a complicated area and I would love to get a book with loads of examples. Anyone know of such a book. To Andy, I have a boatload of way out of the money calls expiring in Jan 2003 and am scratching my head on how to offset the 2003 capital gain. One thought was stock long in an IRA and naked calls in margin. Another thought was arbitrage in which stock in the likes of EMC and NTAP is bought and overpriced brcd near the money calls are short as a synthetic covered call. This seems very dangerous because of the assumption that emc,ntap and brcd will continue to be correlated. Any ideas are appreciated.

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