Quote:
Originally Posted by Balticfox
The problem with such an option strategy is that a big spread typically prevails between bid and ask prices on puts and calls. Therefore it's difficult to pocket the theoretically realizable advantage of that strategy (particularly after commissions).
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Pretty sure all of your income from writing options is also ordinary (or short term capital gain), so you get to pay ordinary tax rates. As opposed to generally lower rates for long-term capital gains.
And unlike income from selling cards, this income is definitely getting reported to the IRS, so anyone who might be tempted to use a little accounting legerdemain when it comes to the taxation of their cardboard sales, that's not a possibility here.
I suppose if your taxable income is low enough that your marginal tax rate is low, then that's not a big deal, but for some of us, our marginal rate is at or approaching the current highest marginal rates.
When you factor in state (and sometimes local) taxes, some of us are lucky enough to get to share 50%+ of our ordinary income with the government.