In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. If Bubba sells the stock at $45 in July, what is his resulting tax liability for that transaction?
A)no liability established until the offsetting option position is closed
B)a $400 gain
C)a $1,000 gain
D)a $400 capital loss

Question

Quizplus · Accepted Answer

a $1,000 gain. There is a $1,000 gain on the stock. The option is a separate capital asset.

In June, Bubba Bought 100 Shares of XYZ at $35