How to minimize tax from the option gain?

[ggr]

How about moving from a long to a synthetic long? Still a wash sale?

I believe so, yes.

Either way, you can sell AAPL and buy something else instead.

You can certainly do that, or just sell AAPL and not buy anything at all.

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Thanks for the answers so far. I trust many fellow TSLA investor would have the same good problem to have. So any insight would benefit the community.

Let's take the exercise and hold approach. Let's say I have 10 Sept calls @60. However I only have $30k to exercise and hold. So I will do the following:

A. Exercise 5 calls and acquire 500 shares @60. Cost is $30k.
B. Sell the other 5 calls and use all the proceed to acquire 100 shares of TSLA @90.

I am clear on A, if I hold the 500 shares long enough it will be long term gain. The question is on B, is there a short term gain when selling the 5 calls, even though all proceeds is used to acquire 100 share with the purpose of holding it for more than 1 year?

Yes. In fact, the "tax clock" is reset when you exercise the A calls, so they won't be long term until the same time as the shares you buy at B.

 

[kevin99]

ggr, I am clear on the tax clock reset. thanks.

However the question on the cost basis for scenario B. Is there a short term gain when the 5 calls was sold to acquire the 100 shares? or the cost of option roll into the cost basis of the 100 shares?

Yes. In fact, the "tax clock" is reset when you exercise the A calls, so they won't be long term until the same time as the shares you buy at B.

 

[TSLAopt]

I am in the same situation long Jan 2014 35 and 40 calls that I bought 9 months ago. To get to the one year mark I'm considering selling a Sept 100 covered call and using the premium to buy the Sept 80 put. This mitigates some risk until Sept so I can wait to close out these 35 and 40 calls at the long terms cap gains rate.
Anyone see any possible fault in this plan?

 

[ggr]

ggr, I am clear on the tax clock reset. thanks.

However the question on the cost basis for scenario B. Is there a short term gain when the 5 calls was sold to acquire the 100 shares? or the cost of option roll into the cost basis of the 100 shares?

The "Yes" was the answer... Yes there is a short term gain on the 5 calls.