Taxes & Options (Very Simple Overview)
Options trading has tax implications. This is a simple overview—always consult a tax professional for your specific situation.
Basic Tax Rules
- Options profits are taxed as capital gains
- Short-term (held less than 1 year) = ordinary income rates
- Long-term (held more than 1 year) = lower capital gains rates
- Premium received from selling options is taxable when received
Important Note
Tax rules for options can be complex, especially for spreads and multi-leg strategies. Always consult a tax professional familiar with options trading.