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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Noel who wrote (173189)	2/26/2003 2:06:53 PM
From: tcmay	Read Replies (1) \| Respond to of 186894

"JB, Taxation of CCs My understanding was that all options are treated as short-term gains." I'm no expert on this, so I won't comment. The important point is that for small investors in the U.S., the equation is different than from those who a) are not in the U.S. but are writing options, b) who have sophisticated tax strategies, c) who are hedge funds. " 'You can always roll them (CC's) to a higher strike at a later date. That may also generate a capital loss (for tax purposes) while protecting and even enhancing unrealized future gains. ' "That is exactly what I did a couple of years ago and Intel kept on climbing at which point I gave in. " Same way that many who were selling puts on the way down eventually gave up on rolling their puts over. For me, taxes are complicated enough without having reams of complicated puts and calls to keep track of. I don't figure I can time the market, so I hold long-term the stocks in companies I think will benefit from long-term changes in technology and the business climate. Writing puts and calls on the entire position is betting that I know which way the market will move, or not move, in the short term. And writing puts and calls on some small fraction of the position is just an irritation on April 15th...an annonying mosquito buzzing around, adding nothting substantive while complicating my calculations even more. --Tim May

To: Noel who wrote (173189)	2/26/2003 2:25:59 PM
From: miraje	Respond to of 186894

Noel, Check out the first paragraph of the middle column at the top of page 54 of this link: irs.gov If you sell the call or put before you exercise it, the difference between its cost and the amount you receive for it is either a long-term or short-term capital gain or loss, depending on how long you held it. Regards, JB

To: Noel who wrote (173189)	2/26/2003 2:31:09 PM
From: rkral	Read Replies (1) \| Respond to of 186894

Noel, re "My understanding was that all options are treated as short-term gains." That is incorrect. For example, from irs.gov, page 54, "If you sell the call or the put before you exercise it, the difference between its cost and the amount you receive for it, is either a long-term or short-term capital gain or loss, depending on how long you held it." AND "If the options expires, its cost is either a long-term or short-term capital loss, depending on your holding period, which ends on the expiration date." AND "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." Regards, Ron [edit: I see James Bowers posted the same quote and source, but I'll leave this post stand anyway.]