A Secret Weapon For stock options

A Secret Weapon For stock options

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When exercised, theres no fast taxable cash flow, and if held to the necessary time period, any earnings on sale is taxed as extended-phrase capital gains instead of normal income.

An extended expiration is additionally practical since the possibility can retain time benefit, even when the stock trades underneath the strike cost. A possibilitys time value decays as expiration approaches, and options prospective buyers dont want to observe their purchased options decrease in benefit, probably expiring worthless Should the more info stock finishes beneath the strike selling price.