How do you figure a very small profit if called away? You received a $21+ premium plus 70 cents of appreciation to strike. Also, BABA doesn't pay a dividend.
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Selling In the Money Covered Calls Strategy Question
- Thread starter LaxFan
- Start date
How do you figure a very small profit if called away? You received a $21+ premium plus 70 cents of appreciation to strike. Also, BABA doesn't pay a dividend.
Times 100...$2,104. after Fidelity commission at the time. Yeah, no dividend. Sorry...I was off a year. I've bought BABA twice and optioned it off both times "sell to open". Looking on Fidelity for the exact numbers.
3/21/19 bought 100 shares of BABA at $179.13
3/21/19 Sell to open 1 lot Jan 20 $180., price $21.04...$2,104.
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If you collected a large premium by selling a deep ITM covered call and taking a nearly offsetting loss when the stock is called away, is there any negative tax consequence? Or is all a wash.
Example: collect $2100 premium (taxed at ordinary income rate of 25%); lose $2000 on the stock (capital loss).
Does that just net out to $100 taxed at %25 tax rate?
Example: collect $2100 premium (taxed at ordinary income rate of 25%); lose $2000 on the stock (capital loss).
Does that just net out to $100 taxed at %25 tax rate?
If you collected a large premium by selling a deep ITM covered call and taking a nearly offsetting loss when the stock is called away, is there any negative tax consequence? Or is all a wash.
Example: collect $2100 premium (taxed at ordinary income rate of 25%); lose $2000 on the stock (capital loss).
Does that just net out to $100 taxed at %25 tax rate?
I would love to find out. My CPA is not the brightest crayon in the box...But he is a CPA and has 30+ years experience. I don't think he could answer...He would have to ask someone else. That is why I did very slightly out of the money...Just so it doesn't become a issue I (or my CPA) would have to try and explain to an IRS agent. I am older and so I would have my CPA do the audit for me...Big bucks. You want your ducks lined up in a row. I've been through 3 audits over the years. None in the last 20 years. All W-2s and 1099s match. Keep it simple stupid or you (I) might have to pay more for an audit than the income it made...
Yes if everything is settled/closed in the same taxable year.If you collected a large premium by selling a deep ITM covered call and taking a nearly offsetting loss when the stock is called away, is there any negative tax consequence? Or is all a wash.
Example: collect $2100 premium (taxed at ordinary income rate of 25%); lose $2000 on the stock (capital loss).
Does that just net out to $100 taxed at %25 tax rate?