A customer buys 1 ABC Oct 50 Call @ $3 and exercises the contract. What is the cost basis for tax purposes?
a. $3
b. $47
c. $50
d. $53
$53
A customer buys 200 shares of ABC stock at $50 per share and buys 2 ABC Jul 50 puts @ $4. The puts expire and the customer sells the stock in the market at $60. The customer has a capital gain of:
a. $800
b. $1,200
c. $2,000
d. $2,800
$1,200
A customer buys 1 ABC Jan 50 call @ $4 when the market price of ABC is $51. The stock then moves to $58 and the customer exercises. The tax consequence upon exercise is a:
a. capital loss of $400
b. capital gain of $400
c. capital gain of $800
d. cost bas
cost basis of $5,400
A customer buys an equity LEAP contract on the first day that the option starts trading. If the contract expires "out the money," the customer will have a:
a. short term capital gain
b. short term capital loss
c. long term capital gain
d. long term capita
long term capital loss
A customer sells short 100 shares of ABC stock at $63 per share. The stock falls to $47, at which point the customer writes 1 ABC Sept 45 Put at $2. The stock falls to $36 and the put is exercised. The customer's cost basis upon exercise of the put is:
a.
$43
A customer buys 2 ABC Jul 45 Calls @ $5. The customer lets the contracts expire when the market price is $40. Which statement is TRUE?
A. The customer has a capital loss of $500
B. The customer has a capital loss of $1,000
C. The customer has a capital lo
The customer has a capital loss of $1,000
If the holder of an option contract allows the option to expire, he or she has a capital loss equal to the premium paid as of the expiration date. Since there are 2 contracts, the customer has lost the $500 premiu
A customer buys 1 ABC Jan 50 Call @ $3 when the market price is $51. The customer exercises the call when the market rises to $53. The tax consequence is:
A. no gain or loss
B. a $300 capital gain
C. a cost basis in the stock of $5,000
D. a cost basis in
a cost basis in the stock of $5,300
When a call is exercised, the customer is buying the stock (no taxable event occurs until those shares are sold). The call premium paid is considered to be part of the acquisition cost of the stock. For tax purposes, th
A customer buys 1 ABC Jan 35 Call @ $5 and exercises the contract. The tax consequence is a:
A. cost basis of $30 per share
B. cost basis of $40 per share
C. sale proceeds of $30 per share
D. sale proceeds of $40 per share
cost basis of $40 per share
When a call contract is exercised, the customer is buying the stock. The customer establishes a cost basis equal to all monies paid for the stock - $35 per share strike price plus $5 per share paid in premiums equals a $40 per
A customer sells 1 ABC Oct 75 Call @ $4 and the contract is exercised. What are the sale proceeds for tax purposes?
A. $71
B. $75
C. $79
D. $80
$79
When a call contract is exercised, the writer is selling the stock. The customer establishes a sale proceeds equal to all received for the stock - $75 per share strike price plus $4 per share received in premiums equals a $79 per share sale proceeds.
A customer buys 1 ABC Jan 45 Put @ $4 when the market price of ABC is $48. The put is exercised when the market price is $40. The tax consequence is a:
A. cost basis of $4,100
B. sale proceeds of $4,100
C. cost basis of $4,900
D. sale proceeds of $4,900
sale proceeds of $4,100
When a put is exercised, a holder is selling the stock at the strike price. The premium paid for the put reduces the sale proceeds. The stock is being sold at $45, but since $4 was paid in premiums, the net sale proceeds are $41 pe
A customer has written 1 ABC Jan 50 Put @ $3. The contract is exercised. The tax consequence to the writer is a:
A. cost basis of $4,700
B. sale proceeds of $4,700
C. cost basis of $5,300
D. sale proceeds of $5,300
cost basis of $4,700
If the writer of a put is exercised, he must buy the stock at the strike price. The premium received is a reduction of the cost of buying the stock. The writer of the put must buy 100 shares at $50 ($5,000), but he or she received $30
A customer buys 100 shares of XYZ stock at $30 per share. The customer then sells 1 XYZ 30 Call contract for a premium of $300. The call contract expires unexercised. After expiration, the customer's cost basis in the XYZ shares is:
A. $2,700
B. $3,000
C.
$3,000
The expiration of the call contracts results in a short term capital gain to the writer of $300, taxable in that year. The cost basis of the stock position is unaffected at $30 per share, for a total cost basis for 100 shares of $3,000. Notice that
A customer buys 100 shares of XYZ stock at $51 and buys 1 XYZ Jan 50 Put @ $4 on the same day. The put expires and the stock is sold in the market for 59. For tax purposes, the put premium is:
A. a capital loss at expiration date
B. a capital loss at the
added to the cost basis of the stock, reducing any capital gain when the stock is sold
When a put is purchased on a stock on the same day that the stock is bought, the put is said to be "married" to the stock position. The only reason the option was purch
If a put is purchased on stock that has been held short term, the stock's holding period:
A. is unaffected
B. is tolled
C. is wiped out
D. becomes long term
is wiped out
If a customer buys stock and does not buy a put on the same day, then the put is not married to the stock. The worry of the IRS is that the customer might attempt to buy a put on stock that has appreciated in value to lock in a gain while the
A customer sells short 100 shares of ABC stock at $50 per share. The stock falls to $40, at which point the customer writes 1 ABC Sept 40 Put at $4. The stock falls to $30 and the put is exercised. The customer's cost basis upon exercise of the put is:
A.
$36
The customer sold the stock short at $50 per share (sale proceeds). Later, the customer sold a Sept 40 Put @ $4 on this stock. If the short put is exercised, the customer is obligated to buy the stock at $40 per share. Since the customer received $4 i
Gain or loss on all of the following options positions will be short term EXCEPT for those realized from:
A. long equity options
B. short equity options
C. long equity LEAP options
D. short equity LEAP options
long equity LEAP options
Since regular stock options have a maximum life of 8 months, all gains and losses are short term. Regarding equity LEAPs, these are Long Term Equity AnticiPation options with lives of 30 months (2 1/2 years). Thus, a purchaser who