I have 300 shares of company X that I’ve held for over a year and currently have a 60% gain. I want to unload the shares because I don’t think there’s much upside in the short-medium term. Would it be smart to sell ATM calls to collect premium and if/when the options are exercised, I deliver the shares I already own? Would my gains still be considered long term aside from the premium collected?
Selling shares vs ATM calls
byu/Nearby-University860 inoptions
Posted by Nearby-University860
8 Comments
In doing this, rather than selling shares,you risk that the stock goes down and you lose your 60% gains, minus whatever you got in premium from selling the calls
Sell ATM calls and buy puts !
Just like exercising a long call, where the call premium is rolled into the basis, the premium on an assigned short call is added to the strike price to determine the sale proceeds. And long-or-short in your situation has nothing to do with the call; it depends on the holding period of the underlying.
That’s the overall picture. However, tax considerations include rules about “qualified” covered calls, when a call suspends the holding period, and other issues that you should study.
I don’t know if it’ll be smart nor does anyone else.
Yes it’ll be long term gains.
If you’re unsure you van modulate your decision by selling 100, selling ATM call on 100 and holding 100
You allergic to making money? Sell the ATM ccalls.
Dunno what stick you are in but you should sell further dated to make more money otherwise you’re overthinking
As good of an exit strategy as any
selling calls to sell your shares is the pro way! you can sell calls multiple times if you are lucky. always keep the premium and sell it so long, till you get assigned. i wouldnt sell shares in another way👍🏻