Criscmt
Member
Tax implications of gains on one leg of straddle?
I bought some calls, not opened as straddles but individual legs at separate dates.
Ignore the contract price numbers, picked some hypothetical numbers.
I believe they turn into straddles effectively?
Purchase/Sold Date | Contract | Buy to Open / Sell to Open | Contract Price
Nov-16-2020 | TSLA Jan-2021 C500 | Buy to Open | 40
Nov-20-2020 | TSLA Jan-2021 C600 | Buy to Open | 50
Nov-25-2020 | TSLA Jan-2021 C510 | Sell to Open | 80
Nov-30-2020 | TSLA Jan-2021 C610 | Sell to Open | 90
In Jan-2021 before expiration of C510 and C610, I buy to close them.
Let's say at prices $60 and $70. AND, I also exercise both the calls C500 and C600.
If we assume that I don't sell those TSLA shares in 2021, would the buy to close of calls lead to tax event in Jan-2021, for gains $80-$60 ($20 * 100) and $90-$70 ($20 * 100)?
I believe if it's losses when we buy back the short call legs, we can't claim a loss as the corresponding long leg is open.
But with profits I won't be surprised if it's different (that gains must be counted towards taxes, unlike losses).
Does anyone have any idea, thoughts or pointers that would be helpful in finding the right answer for this?
@adiggs
I bought some calls, not opened as straddles but individual legs at separate dates.
Ignore the contract price numbers, picked some hypothetical numbers.
I believe they turn into straddles effectively?
Purchase/Sold Date | Contract | Buy to Open / Sell to Open | Contract Price
Nov-16-2020 | TSLA Jan-2021 C500 | Buy to Open | 40
Nov-20-2020 | TSLA Jan-2021 C600 | Buy to Open | 50
Nov-25-2020 | TSLA Jan-2021 C510 | Sell to Open | 80
Nov-30-2020 | TSLA Jan-2021 C610 | Sell to Open | 90
In Jan-2021 before expiration of C510 and C610, I buy to close them.
Let's say at prices $60 and $70. AND, I also exercise both the calls C500 and C600.
If we assume that I don't sell those TSLA shares in 2021, would the buy to close of calls lead to tax event in Jan-2021, for gains $80-$60 ($20 * 100) and $90-$70 ($20 * 100)?
I believe if it's losses when we buy back the short call legs, we can't claim a loss as the corresponding long leg is open.
But with profits I won't be surprised if it's different (that gains must be counted towards taxes, unlike losses).
Does anyone have any idea, thoughts or pointers that would be helpful in finding the right answer for this?
@adiggs