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This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
In this episode you will learn:
- That exercising an option is not an immediate taxable event; it adjusts the cost basis or sales proceeds of the stock.
- The mnemonic "Call Up, Put Down" to remember that for calls you add the premium to the strike price, and for puts you subtract it.
- How buying a protective put can reset the holding period of a stock held for one year or less.
- The unique tax treatment of covered calls, where the stock's original cost basis is maintained upon assignment.
- The special 60/40 tax rule for broad-based index options under Section 1256, where gains are 60% long-term and 40% short-term.
For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
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