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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: RayV who wrote (185)2/17/1997 4:26:00 PM
From: Gerald Walls   of 14162
 
Here I made a mistake in not placing an All Or Nothing order. I got two partial fills in one day, so I got the calls at 1/8 but had topay the commission twice.

You have a lousy broker. If the two partial fills were on the same day a real broker will only charge you one commission. Complain loudly.

What if instead of selling the far out in-the-money calls, I instead bought 400 MORE shares of AXC at 7 5/8 (Friday's numbers I know), and sold 4 feb 7.5 calls at 5/16. The idea would be to get called out on Friday and then deliver the 9.5 priced shares for a $800 tax write-off (since the feb 10 positions are closed?). Adding up the numbers I think I would end up still owning 400 shares and my new COST BASIS would be slightly lower at 8.8 and I would have that $800 tax write-off.

For the same reason you couldn't just buy some at 7.5 and then immediately sell the 9.5 shares and take the $2 tax loss: the IRS considers it a wash sale and disallow the loss, forcing you to revalue the basis of the remaining shares. You must wait 31 days between a buy and a sell to avoid a wash. It doesn't matter if the stock was sold voluntarily or was called away. If you're in the wash sale period the IRS will force you to consider the lower basis stock to be the ones you delivered.
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