Options Taxation and Calculations: Rapid Fire

What this video covers

• The "Calls Add, Puts Subtract" breakeven formula and why buyer and writer share identical break-even points
• How to calculate maximum gain, maximum loss, and breakeven for long calls, short calls, long puts, short puts, debit spreads, credit spreads, straddles, and combinations
• Why max gain plus max loss on any spread always equals the strike difference, and how to use this for verification
• The critical distinction between short put max loss (capped at strike minus premium, stock to zero) and short call max loss (truly unlimited)
• Tax treatment at expiration (capital gain or loss), exercise (premium folds into stock basis or sale proceeds, no option gain recognized), and the fresh holding period for stock after exercise
• Why option writers always have short-term gains or losses, while only LEAPS buyers holding more than 12 months qualify for long-term capital gains treatment
• The 60/40 mark-to-market rule for broad-based index contracts, the 26.8% blended top rate, the December 31 realization date, and the three-year loss carryback
• When the wash sale rule applies to options (61-day window) and when the same-day married put exception preserves the stock's holding period