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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: STEVE who wrote (40659)	3/2/2000 2:12:00 AM
From: Alski	Read Replies (1) \| Respond to of 45548

Steve, If the call you write expires it's short term gain. If it's exercised you adjust your gain on the sale of the stock by the amount received from the sale of the call. The holding period is from when you originally bought the stock to when the option was exercised, when you sold the call doesn't enter into it at all. An example (made up numbers and ignoring commissions), say you bought 100 COMS @ $25 May 1, 1998, sell a July 115 call tomorrow for $50 and then that call is exercised on July 21, 2000. Your selling price is $115, your basis is -$25 (25-50), so your gain is $140. Holding period is May 1, 1998 to July 21, 2000 = 14+ months so your gain is long term. It's all in IRS pub 550 irs.ustreas.gov Writer of option. If you write (grant) an option, how you report your gain or loss depends on whether it was exercised. If you are not in the business of writing options and an option you write on stocks, securities, commodities, or commodity futures is not exercised, the amount you receive is a short-term capital gain. Writers of calls and puts. If you write (grant) a call or a put, do not include the amount you receive for writing it in your income at the time of receipt. Carry it in a deferred account until: 1. Your obligation expires, 2. You sell, in the case of a call, or buy, in the case of a put, the underlying stock when the option is exercised, or 3. You engage in a closing transaction. If your obligation expires, the amount you received for writing the call or put is short-term capital gain. If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the amount you received for the call when figuring your gain or loss. The gain or loss is long term or short term depending on your holding period of the stock. Hope that helped...Alski