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

To: Uncle Frank who wrote (4265)	5/19/2004 9:27:34 PM
From: Dr. Id	Respond to of 5205

Wouldn't that be true of buying puts against a long position as well? duf If you sell DITM calls, it is basically a way of locking in a price at a future date (for example to extend the period in order to be long term in the stock). Therefore, it is deemed to be a "constructive sale"...you wouldn't get the long term advantage. If you're buying a put as insurance, I'm not sure what would be "illegal" about that. Maybe there is a scenario in which the IRS would also consider you to be a short term holder if you're buying a put a few strikes into the future. Not sure.

To: Uncle Frank who wrote (4265)	5/20/2004 12:48:05 AM
From: Dan Duchardt	Respond to of 5205

Good point. There is stuff about the treatment of "offsetting positions" of all kinds in the tax guidelines I have read, but the put side of things seems fuzzier than the DITM calls. I didn't think buying near-ATM puts was a problem, but I could be wrong.