How Does the Holding Period Differ for a Written (Sold) Option?
The holding period for a written option is generally irrelevant for tax purposes. If the option expires, the premium received is a short-term capital gain, regardless of the holding period.
If the option is closed via a buy-to-close transaction, the gain or loss is short-term. If the option is assigned, the premium adjusts the basis or proceeds of the underlying asset.
Glossar
Written Option
Position ⎊ A Written Option signifies the seller's side of an options contract, obligating the writer to fulfill the terms if the buyer exercises the right.
Holding Period
Duration ⎊ This term defines the intended time frame an investor plans to maintain a specific asset position or derivative contract before initiating a liquidation or rebalancing action.