When Is an Option Considered “Held” for the Purpose of Determining Its Holding Period?

An option is considered "held" starting on the day after the option is purchased or written. The holding period ends on the date the option is sold, closed, or expires.

For tax purposes, the holding period determines whether any resulting gain or loss is short-term (held one year or less) or long-term (held more than one year). This period is crucial for establishing the tax character of the transaction.