How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: JoAnn McCracken who wrote (6250)	12/30/1997 12:49:00 PM
From: Herm	of 14162

Hi JoAnn, Paying taxes is a great problem to have in this country! It means you are making more money! :-) According to guru Lawrence McMillan, Options as A Strategic Investment, page 807: "Written calls that are brought back in the listed option market OR are allowed to expire worthless are short-term capital gains. A written call cannot produce a long-term gain, regardless of the holding period. This treatment of a written call holds true even if the investor simultaneously owned the underlying stock (that is, he/she had a covered write). As long as the call is brought back or allowed to expire worthless, the gain OR loss on the call is treated separately from the underlying stock for tax purposes." Now, as for your own record (scoreboard) of your net cost basis (nut), I factor ALL COST (transactions for each stock) into my template numbers because it really is the bottom line if you are making or losing money as an investor/speculator. See the difference? Just think! Every reader has a different % return on investments depending on what tax bracket they are paying taxes on!

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