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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: edamo who wrote (6236)	9/13/1999 11:15:00 AM
From: rel4490	Read Replies (2) \| Respond to of 54805

"and if the sale of the option never results in a closing purchase, ........then what???? " Summary: 1. Short sale followed by closing purchase is always taxed as a short term transaction. 2. Short sale of a put not followed by a closing purchase can only result from (a) stock price at expiration being higher than the strike price in which case the put expires worthless. The premium you received is a short term gain. (b)stock price at expiration is below the strike price and the stock is "put" to you. You start a new holding period for the stock and your tax basis is the strike price less the premium you received on the sale of the put. 3.Short sale of of call not followed by a closing purchase can only result from (a) stock price at expiration being lower than the strike price in which case the call expires worthless. Your premium is a short term gain. (b) stock price at expiration is higher than strike price in which case your long stock is called away. The stock transaction is either long term or short term depending on how long you held the stock before you sold the call. Your sell price for the stock is the strike price plus the premium for the sale of the call.