No. of Recommendations: 7
Also, the tax treatment of covered calls can be very different from short puts.
In the US, gains on short puts are treated as short-term capital gains, even if the short put positioin is held for more than a year.
With a covered call, the shares of stock can become long-term after one year, if the shares are not called away. This could be an advantage for the covered call.
Also, beware that tax treatment of covered calls where the short call is ITM (in the money, or below the current stock price) can be complicated.
And everything Jim said.
So, I suppose that short puts and covered calls are only very similar until you really start to think about it.
