22 June 2022 14:09

For a gain of +$X on the underlying security, would the gains on a single LEAP be identical to the gains on 100 shares of that security?

How do you calculate tax on security transactions?

Example: How Stock Dividends Affect Tax Basis

  1. You purchased 100 shares of XYZ stock for $1000.
  2. Later, you receive a 10% stock dividend = 10 shares of stock.
  3. Therefore, your tax basis in each share of stock = $1000/(100+10) = $9.09.


How long should you hold a LEAP option?

For example, a two-year LEAP call could be held for a single year and then sold and replaced by another two-year option. This could be done for many years, regardless of whether the price of the underlying security goes up or down.



Rolling LEAP Options.

LEAP Call option
5-year appreciation +17.2%

When should I take profits on LEAPS?


Quote: If the conditions are right somewhere between 100.

What is the capital gains tax rate for 2021?

2021 Short-Term Capital Gains Tax Rates

Tax Rate 10% 35%
Single Up to $9,950 $209,425 to $523,600
Head of household Up to $14,200 $209,401 to $523,600
Married filing jointly Up to $19,900 $418,851 to $628,300
Married filing separately Up to $9,950 $209,426 to $314,150