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To: jackrabbit who wrote (163499)	1/1/2001 7:49:18 PM
From: hlsjones	Read Replies (1) \| Respond to of 176388

Since the Jan 1st of 2000 that is correct it just becomes ordinary income and the basis in the underlying is whatever you paid. However... That is just how you need to report the income to the IRS. You don't need to think that way, it gets in the way of knowing where you really are in the trade. If you stay in the underlying less than a year it has no effect anyway. Only on the longer plays. HJ

To: jackrabbit who wrote (163499)	1/1/2001 8:23:14 PM
From: mepci	Respond to of 176388

J: There may be two issues here. One: When you do round trip - buy to open and sell to close or sell to open and buy to close the same option, you completed a trade on the instrument and hence it becomes gain or loss to be reported. TWO: If you write a covered call, the money you take in should offset your stock cost basis. If the covered call expires, do you take the original premiums and reduce the stock cost basis or do you treat the entire premium you pocketed as profit? I hope some of the tax people on this board will answer this QS.?