tag:blogger.com,1999:blog-4402283548766807872.post2613804041680852004..comments2024-03-20T02:26:06.500-04:00Comments on The Blunt Bean Counter: Covered CallsThe Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-4402283548766807872.post-7347767734375622022017-03-28T23:19:55.053-04:002017-03-28T23:19:55.053-04:00Thanks for the link. I see this is likely a case o...Thanks for the link. I see this is likely a case of the correct method and the common method differing, whether due to ignorance or expedience (who am I to judge?). Guess I'll be learning about T-1Adj forms! The excitement is killing me. ;-)Friendhttps://www.blogger.com/profile/04935607838023769081noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-20799785205107630522017-03-14T21:48:16.990-04:002017-03-14T21:48:16.990-04:00See this link. http://www.taxtips.ca/personaltax/i...See this link. http://www.taxtips.ca/personaltax/investing/taxtreatment/options.htm<br /><br />I do not provide tax planning advice on this blog. I will say that many people file incorrectly in respect of puts and calls, some because they dont know what is right and some because they cant be bothered to do what is correct. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-27816597855697721252017-03-14T06:14:30.523-04:002017-03-14T06:14:30.523-04:00Being very new at this, I wonder if you can clarif...Being very new at this, I wonder if you can clarify...<br /><br />I purchase 100 shares of XYZ for $10000. In March 2016 I write a call and receive $300. It expires in August 2016. So I write another call immediately, for $260, and it gets called away in February 2017 when I receive $12000 for the sale. How does this work? My best guess:<br /><br />I claim $300 cap gain in 2016 and that's the end of that; I don't have to think of this one again because it expired.<br />I'm supposed to also claim $260 as cap gain for 2016, but then I will have to file an amendment to my 2016 taxes so that I can claim $2000 + $260 as a cap gain in 2017.<br /><br />I have been told that it's OK to simply claim the cap gain only at the time the call expires/is called. If that is the case, I wouldn't bother with the $260 on my 2016 return and just wait until the expiry date/sale. However, I can find nothing from CRA or any 'tax tips' source that explicitly says this is acceptable.<br /><br />Any suggestions? It does seem slightly ridiculous to claim the $260 for 2016, especially since I already know at the time of filing that I will have to 'undo' the claim. Am I missing something here?<br /><br />Thanks!Friendhttps://www.blogger.com/profile/04935607838023769081noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-5046758803825348732011-05-27T08:22:51.230-04:002011-05-27T08:22:51.230-04:00Anon, not to clog board, send me an email at addre...Anon, not to clog board, send me an email at address on header at top of the pageThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-46461018596454521852011-05-26T23:21:36.513-04:002011-05-26T23:21:36.513-04:00"throw up their hands and just
report using ...<i>"throw up their hands and just <br />report using a method they feel <br />is easiest for them, technically wrong" </i><br /><br />Could you provide more info on this? What happens if CRA doesn't like this? I'm not talking about a case of tax evasion here, I'm talking about a case where income was reported in a logical, consistent, but technically wrong way. <br /><br />eg:<br />Sell to open naked put in 2009. buy to close transaction in 2010. Report entire transaction and net profit/loss in 2010.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-80254544979682212272011-05-26T22:42:33.921-04:002011-05-26T22:42:33.921-04:00thx Anon- Unfortunately I am not aware of such a p...thx Anon- Unfortunately I am not aware of such a program. The reality is that this is so complex and time consuming, that many people hire a bookkeeper specifically for this or throw up their hands and just report using a method they feel is easiest for them, technically wrong but practically they dont care as they feel it evens out over time.<br /><br />p.s.- Blogger is not allowing me to comment as the Blunt Bean Counter (pic with suit), so I am just commenting through regular commentsThe Blunt Bean Counternoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-70557761783429071342011-05-26T16:26:11.586-04:002011-05-26T16:26:11.586-04:00Great synopsis Mark. I trade myself and constantl...Great synopsis Mark. I trade myself and constantly use this strategy. I find tracking all my trading activities cumbersome and difficult (especially for tax purposes). Mark, are you aware of a program that can assist with this for tax purposes?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-71003865691881302052011-05-26T09:57:17.696-04:002011-05-26T09:57:17.696-04:00Simon, as far as I know, Annon is correct. I check...Simon, as far as I know, Annon is correct. I checked with a broker and they think it can also be done in a TFSA, but you will have to check with your brokerage house.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-6299237153174855742011-05-26T09:55:23.553-04:002011-05-26T09:55:23.553-04:00Anon, great question. In my example i reflected th...Anon, great question. In my example i reflected the $4 as a reduction in the cost base to try and show the percentage return advantage of using a covered call, but this is misleading. I am going to change the example. When you sell the covered call option for $4, the $4 is a capital gain (if naked call option maybe income)in the year it is sold. If the call expires, nothing further is required, however, if the option is called in a future year, technically (practically not necessairly always done) the prior year return is to be amended and the $4 removed and the $60 received plus the $4 premium=$64 becomes your proceeds of disposition in that future year. If the option is called in the same year, you again have $64 of proceeds, but technically $4 in one transaction and $60 in another.<br /><br />In regard to your second question, I unfortunately do not have the time to get into it now.<br /><br />Here is a link to a great blog on the taxation of options and calls.<br /><br />http://blog.taxresource.ca/how-stock-options-are-taxed/The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-85138873729838575672011-05-26T08:56:07.400-04:002011-05-26T08:56:07.400-04:00I've sold covered calls in my RRSP. You can a...I've sold covered calls in my RRSP. You can also buy calls and puts in your RRSP. <br /><br />But you cannot sell naked calls or puts in your RRSP.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-33996733916430742932011-05-26T08:38:32.926-04:002011-05-26T08:38:32.926-04:00Hi Mark, can you sell options on stocks held in an...Hi Mark, can you sell options on stocks held in an RRSP or TSFA?Simonnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-80173179790036744052011-05-26T08:16:51.547-04:002011-05-26T08:16:51.547-04:00But how do you account for it on your income tax r...But how do you account for it on your income tax return? Does it lower your cost base for the stock, or is it accounted for as a separate transaction?<br /><br />What if it's Dec.2011, and you sell a July 2012 call for $8. You've cashed in $800. Then you buy back the call to close the position in Marc 2012 for $5. So, profit of $3. But in which year do you report the income?Anonymousnoreply@blogger.com