Let's take these hypothetical trades
- On 08/01/2020: Bought AAPL Jan-2022 100C at $30 (Long call)
- On 08/30/2020: Sold AAPL Jan-2022 110C at $50 (Short Call). By this date, 08/30/2020, before my short call sale, my long call was $55 in value. In other words, I had unrealized gains on my long call ($100 Strike).
Through Dec-31-2020 I continue to hold both the positions.
- Do I have to pay taxes in my 2020 filing seeing this as constructive sale?
- If yes, what if the expiry dates are different rather than being the same?
- Again, if yes, would a significant difference between the strikes of long and short calls make it to be a not constructive sale?
I thought Downside protection and upside limitation influence whether this would be considered a constructive sale. I am avoiding the downside risk through the short call. On the upside, technically I am not giving up the upside. At expiry AAPL might close above $110+$50=$160. And my final gain is $30+$10. Does this make it appropriate to be reported in 2022 taxes, rather than 2020 taxes?