Covered Calls-Writing Covered Calls

Luigi asked:


I’ve generally tried to get a return of at least 10% on a 60 day (or less) buy-write situation. Is that enough?

Jerome Bick

Dave W asked:


1) I was assigned on covered call options. I understand that I should add the premium received for the option to the proceeds from the associated stock sale and report that on Schedule D as part of the sale price of the stock. Is that all that goes on Schedule D? Do I report the option itself anywhere?

2) Separately, I wrote covered call options that had less than 30 days until expiration and identified them as a straddle with the related stock. I later bought back the calls at a loss. Does this count as an “identified straddle” where I just increase the basis in the stock by the amount of the loss or does that fact that the expiration date was less than 30 days away mean that it is subject to the traditional loss deferral rules? Also, what effect is there on my holding period for the stock – was it terminated when I sold the options or just suspended?

Cletus Duty