Using Options for Taxes and M&A Spread
A practical & tactical way to use options
There are a lot of ways to use options. I have talked about a handful of my favorites in the past, but this week I had 2 very practical use cases pop-up in my portfolio.
These weren’t esoteric and theoretical strategies.
These weren’t speculation or leverage trades.
These weren’t some long-term ‘picking up nickels infront of a steamroller’ play.
It was 2 very real ways that understanding options allowed for making real positive money in my portfolio while also de-risking.
And I thought it would make for a great article as it shows 2 very practical ways you can use options that add a lot of alpha in your portfolio.
If you have been sitting on the fence about learning about stock options, hopefully this shows you what you are missing by not checking it out. (Just search options on the stack as there is probably a dozen+ articles covering the basics of buying & selling calls and puts up through how I use them in my portfolio)
Stock Options To Boost Returns
I know, I know - this week we were going to hit on the 2nd part of Controversial Finance Topics. But the Feb 21st option expiration date is due and this recent example is just too good to ignore.
If you have been dabbling and building up your option knowledge, here are 2 new things to pack into your bag of tricks.
And even if you have been playing with options for a while, it is good to be reminded of ways to do things.
The 2 situations we will go over in this post are:
Using options to ‘sell’ a stock that you haven’t held for 1 year, but get long-term capital gain tax treatment
Closing the spread on an acquisition while de-risking your exposure and increasing your IRR all in 1 easy step.
It should go without saying that getting long-term capital gain status can save you 10-25% depending on your income level. So that is a huge benefit when the opportunity comes up.
And if you ever had a stock that is getting acquired but is sitting at a decent spread to the closing price, you know the paid of waiting to close or selling and getting your gains now…well the 2nd example lets you eat your cake and have it too.