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Tag Archives: capital gains

Tax Implications of Writing Covered Calls against Long-Term Holdings

Covered call writing is a short-term strategy where we sell Weekly or Monthly options to generate cash flow. It is best to use this strategy in sheltered accounts to defer or eliminate tax consequences but that is not always possible. Generally, the income from covered call writing results in short-term capital gains (losses) but there […]

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Alan Ellman/covered call writing seminar

Capital Gains (Losses) For Selling Cash-Secured Puts In Non-Sheltered Accounts

In a recent article, tax implications for covered call writing was discussed. In this publication I will highlight the tax ramifications as they apply to selling put options. What is a Capital Gain?  A capital gain is an increase in the value of as capital asset, such as a stock or an option that gives […]

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covered call writing and capital gains

Capital Gains (Losses) For Covered Call Writing In Non-Sheltered Accounts

Whether we sell covered calls or cash-secured puts strong consideration should be given to trading in sheltered accounts whenever possible. Most, if not all, of our trades will be short-term in nature (less than one year) and therefore will be taxed at the ordinary income tax rate (up to 35%) which is much higher than […]

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Blue Collar Premium Watch List

How Will the Dividend Tax Increase Affect Covered Call Writers? By Guest Author Laurie Itkin

There has been a lot of hysteria and hyperbole surrounding the expiration of the Bush-era tax cuts and how it might affect dividend income. The Blue Collar Investor’s weekly list of covered call candidates often includes a number of dividend-paying stocks as shown in the green-highlighted column in the chart below:     Should covered […]

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Portfolio overwriting with GMCR

Portfolio Overwriting- Selling Covered Calls on Stocks You Want to Keep.

For covered call writers the main stock option strategy is to purchase an equity specifically for the purpose of selling the corresponding call option. The investment time frame is one to two months as earnings reports will end the “run” of even the best performing equities (if you agree with my guidelines). In many cases share assignment is […]

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Tax Treatment of Covered Call Writing in Non-Sheltered Accounts

President Obama has brought to the forefront the issue of taxes as a major part of his economic stimulus package. With that in mind, I thought it appropriate to discuss some of the tax issues that face covered call writers. First and foremost, let me state the obvious: I am not a tax expert. However, I […]

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