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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: JGoren who wrote (41)	4/19/2001 12:31:10 PM
From: Dr. Id	Respond to of 5205

If you buy back the calls without anything being exercised, it's like a separate transaction and can be deducted as a loss.

To: JGoren who wrote (41)	4/19/2001 1:07:47 PM
From: Uncle Frank	Respond to of 5205

I've treated it as a loss, as Id suggested, but I've got a nagging concern that it could be regarded as a "constructive sale" since you're protecting profits in the underlying. Perhaps you should check with your broker or tax advisor before coming to any conclusion. uf btw - please let us know what they say.

To: JGoren who wrote (41)	4/19/2001 7:15:57 PM
From: cfoe	Respond to of 5205

Options transactions, if not related to a transaction in the same stock (such as sell the stock for a loss, but buy options to retain the stock - doing this would run afoul of the wash sale rules), are separate and any loss or gain is treated in the same way as similar transactions in the underlying stock. So, buying back the calls is simply a closing of the transaction that began when you sold the calls - nothing more, nothing less. since the transaction started with a "short-sale," the gain or loss is short-term for tax purposes.