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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Caroline who wrote (7522)	5/27/1998 10:04:00 AM
From: VincentTH	Respond to of 14162

Pub 550 agrees with Caroline: If the call is a deep ITM call (rule of thumb: 2 or more strike prices below the stock price; Pub 550 gives details about how to determine this), then the holding period of the stock is suspended until the option position is closed. The holding period is also suspended when a protective put is bought. Also the pp is treated as "shorting against the box" w.r.t tax and any un-realized cap gain in the stock must be reported for the year. Disclaimer: I am no CPA.