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: Brian Coakley who wrote (7236)	4/7/1998 7:34:00 PM
From: Herm	Read Replies (3) of 14162

Hi Brian, Tax questions are very good questions for our readers thinking about CCing, options buying, and options (trading) selling. Vincent did a nice job of answering your inquiry. Wow! You are really in the money with your position. Great for you!! I would only add to Vincent's reply that the exercise transaction date will become the starting date for your stock regardless of how long you have been holding the Calls before exercising. So, once exercised selling any part of that stock position before April XX, 1999 date will result in a short capital gain/loss. Keep it pass that one year mark and you are in the long term capital gains/loss tax advantage. Here is a quick review of the basic tax treatments: ------------------------------------------------------------ ACTION.................TAX TREATMENT ------------------------------------------------------------ CALL buyer exercises Add CALL premie to stock cost PUT buyer exercises Subtract PUT premie from stock sale price CALL write assigned Add CALL premie to stock sale price PUT writer assigned Subtract PUT premie from stock cost

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