Is a covered call tax treatment the same as a short sale?
September 15, 2006
Date: Wed, 14 Jun 2006
From: Walter
Is selling a covered call considered by the IRS to be a short sale?
Thank you
Walter
Answer
Date: 30 Jun 2006
Hello Walter,
No. A covered call is different from a short sale. A short sale is a fixed obligation to sell something that will be delivered in the future. A call is an option to sell, which may or not be exercised in the future, even if you possess the underlying asset to be sold in a covered call.
Good luck!
Mike Gray
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