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Learning, Sharing, and Teaching => Investor Alley => Topic started by: rayt168 on September 12, 2016, 01:55:26 PM

Title: Tax implications of selling long term covered call options
Post by: rayt168 on September 12, 2016, 01:55:26 PM

Has anyone sold long term covered calls that span into the next year?  If so, what are the tax implications of doing this?  Do you recognize all of the premium in the current year or is there some type of prorating that needs to be done between the current year and the following year?  Thanks in advance. 
 

Title: Re: Tax implications of selling long term covered call options
Post by: Financial.Velociraptor on September 12, 2016, 04:15:14 PM

You recognize the sale in the period it expires.  In the US, short (sold) options contracts are ALWAYS short term capital gains/losses even when held for a period longer than a year.  Long (purchased) options contracts are LTCG/L when held longer than a year.