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Strategies & Market Trends : IRS, Tax related strategies--Traders
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To: Short A. Few who wrote (659)1/16/1999 5:38:00 PM
From: Colin Cody  Read Replies (1) of 1383
 
Short, IMO covered call writing is indicative of an INVESTOR if the taxpayer holds them to enhance the return on his common stocks, holding the contracts open until expiration, or maybe covering when they eventually become nearly worthless.

On the other hand if the common stocks were just used to facilitate the speculative writing of calls, catching fast market swings, and covering quickly, and this was done throughout the year on a full-time basis, THEN I'd say this might be the activity of a Trader for tax purposes.

The I.R.S. has not established anything regards trader status, this is done by the courts, and in the courts I have not seen call options being a material part of a decision.

Colin
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