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Author: stocksplit2000 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: identifying and avoiding constructive sales Date: 5/15/2000 1:24 AM
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Who understands constructive sales??

If one owns stock for 5 years and regularly sells out of the money covered calls occassionally they end up in the money prior to option expiration.

1)One can go through assignment and sell the stock paying a long term capital gain.

2)One can buy back the call prior to assignment and manifest a short term loss.

3)One can go through assignment and one can identify the shares (versus purchase) and open a short position. At a later date one buys back the short position and never makes a transaction with the long shares.

4)One can go through assignment and one can identify the shares (versus purchase) and open a short position. At a later date one delivers their long shares to satisfy the short position.

I believe the 4) is a constructive sale and that the sale date is the day of the short position and not the day of delivery. What is the situation with 3)? is or is this not a constructive sale?

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