O'Reilly logo

Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks by W. Edward Olmstead - Professor of Applied Mathematics McCormick School of Engineering and Applied Sciences Northwestern University

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Tax Code Restrictions

Several options strategies are available to provide a complete, cost-free hedge of your stock profit. Unfortunately, the IRS does not allow such strategies to be employed for the purpose of postponing a tax payment. The IRS refers to such disallowed hedges as constructive sales. There is no need to dwell on the complicated definition of what constitutes a constructive sale, because our concern here is in a useful strategy that is allowed.

The IRS does permit the use of the married put strategy (see Chapter 17, “Married Puts”) to protect profit in a stock. This strategy has the drawback that it is not cost-free, and in fact can be quite expensive in some circumstances. The married put strategy involves buying a put option ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required