How are gains made in the options market treated come tax time? The tax consequences of an options transaction depend in part on the tax status of the investor and may differ depending on the type of underlying commodity involved.
Tax rules are not the same for equity, index, currency and debt options. Here are some other taxation factors to consider:
- Whether an option has been exercised, has expired or is still open
- Whether the option is covered or uncovered
- Whether the option represents a short or long position
Typically, a long option that has been exercised results in a capital gain or loss. One that has expired without exercise results in a capital loss of the premium.
A short option that has been exercised also results in a capital gain or loss. One that has expired without exercise results in a capital gain of the premium.
TradingThe ability to exercise only on the expiration date is what sets these options apart.
TradingThere are times when an investor shouldn't exercise an option. Find out when to hold and when to fold.
TradingLearn how analyzing these variables are crucial to knowing when to exercise early.
TradingA brief overview of how to profit from using put options in your portfolio.
TaxesWe present a basic introduction to the US tax processes of futures and options.
TradingOptions are valued in a variety of different ways. Learn about how options are priced with this tutorial.
TradingLearn the top three risks and how they can affect you on either side of an options trade.
TradingWeekly and quarterly options were introduced to give a greater choice of option expirations to investors, and enable them to trade more efficiently.