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
- You purchased 100 shares of XYZ stock for $1000.
- Later, you receive a 10% stock dividend = 10 shares of stock.
- 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 |