How are proceeds from writing covered calls taxed?
"The tax comes when you close the position. If the option expires worthless it's as if you bought it back for $0. There's a short-term capital gain for the difference between your short-sale price and your buyback price on the option. I believe the capital gain is always short-term because short sales are treated as short-term even if you hold them open more than one year. If the option is exercised (calling away your stock) then you add the premium to your sale price on the stock and then compute the capital gain. So in this case you can end up treating the premium as a long-term capital gain. See IRS pub 550 http://www.irs.gov/publications/p550/ch04.html#en_US_2010_publink100010619 Search for ""Writers of puts and calls""" Successful covered calls are short term capital gains. The amount of time you have owned the underlying security is irrelevant. The gain occurred in the option period which will be an amount of days less than needed for a long term capital gain classification. Failed Covered calls can be either as the date you acquired the stock you are forced to sell determines their classification.
"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets.  If you are currently banking with one of the six big bank, then they will offer stockbroking services.  You can shop around for the best commission rates.  If you wish to manage your own investments, then you will open a ""self-directed"" account.  You can shelter your investments from all taxation by opening a TFSA account with your stock broker.  Currently, you can add $5,500 per year to your TFSA.  Unused allowances from previous years can still be used.  Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling ""unmanaged index funds"" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets.  However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency.  There are also issues to do with foreign withholding taxes when you trade foreign shares directly.   In the case of the US, you will also need to register with the US tax authorities.  Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market.  The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs.  For example, you can track all of the major US indices by trading in Toronto in Canadian dollars.  The S&P500, the Dow Jones, and the NASDAQ100 are offered in both ""currency hedged"" and ""unhedged"" forms.  In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering ""covered call"" strategies and ""put write"" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website." "You owe no tax on the option transaction in 2015 in this case.  How you ultimately get taxed depends on how you dispose of the position.  If it expires, then you will have a short-term capital gain on the option position at expiration.  If it is exercised, then the option is ""gone"" for tax purposes and your basis in the underlying is adjusted.  From IRS Publication 550: If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the amount you received for the call when figuring your gain or loss. The gain or loss is long term or short term depending on your holding period of the stock. In your case, this will be a long-term capital gain. For completeness, if you buy to cover the option back from the market before expiration or exercise, then it is also a short-term capital gain. Also, keep in mind that this all assumes that this covered call is ""qualified"" so that it does not count as a straddle.  You can find more about that in Pub 550. https://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010630 All of this is for US tax purposes." Foreclosure is at a high level the bank declaring that the debtor cannot pay their promissory note (their debt).  This is shortly followed by default, which is the removal of debtors rights to the property.  After the debtor has defaulted, he either chooses to voluntarily remove himself and his belongings from the property, or is forcibly evicted.  In the US eviction is carried out by local law enforcement, such as the sheriff's office.   The bank is now the sole owner of the property, and proceeds to sell it, in an attempt to recoup their investment.  If the bank cannot recoup their investment by selling the house, the rest may be converted to unsecured debt against the debtor.  If the bank chooses to forgive the remaining debt, the debtor may have a tax liability for cancellation of debt.  Also the debtor may also be liable for any appreciation the house did before it was sold, but this likely to be nontaxable if the house in question is the debtor's primary residence.  They also send the credit bureaus the notice of foreclosure, which is how your credit score is hurt. Private Mortgage Insurance or Lenders Mortgage Insurance will pay the lender some amount back to cover their losses. See Also: "If you are buying and selling mutual funds in the same family of funds (e.g. Vanguard), then you can set up an on-line account on the Vanguard website (www.vanguard.com) and it is easy: Vanguard offers a ""Transaction"" service that allows you to sell shares of VFINX, say, and buy shares of VBTLX, say, from the proceeds of the sale all in one swell foop. But, if you are holding the VFINX shares through your on-line account with, say, eTrade, then it depends on what services eTrade provides to you. Will it allow doing all that in one transaction, or will it wait for the cash to come from Vanguard, and then send the money back to Vanguard to invest in VBTLX? In any case, selling VFINX shares and investing the proceeds in PRWCX shares, say,  cannot be done on the Vanguard site only; Vanguard will send the proceeds of the sale of the VFINX shares only to your bank account, not anywhere else. You  then need to tell T. Rowe Price (where you presumably have an account already) that you want to invest $X in PRWCX shares and to withdraw the cash from your bank account. If you are doing it all through eTrade, then the money from the sale of VFINX goes from Vanguard to eTrade (into something called a sweep account, or maybe your cash account at eTrade) and you invest it in PRWCX after appropriate delays in receiving the money from Vanguard into eTrade, etc. If your cash account (bank or eTrade) has enough of a balance, you could sell VFINX and buy PRWCX on the same day. where the purchase is made from the money in the cash account and replaced a few days later by the proceeds from Vanguard. Bouncing of checks (or inability to act on a hot tip to invest in something) in the interim is your problem; not the bank's or eTrade's." It's a covered call.  When I want to create a covered call position, I don't need to wait before the stock transaction settles. I enter it as one trade, and they settle at different times. Capital gain distribution is not capital gain on sale of stock. If you have stock sales (Schedule D) you should be filing 1040, not 1040A. Capital gain distributions are distributions from mutual funds/ETFs that are attributed to capital gains of the funds (you may not have actually received the distribution, but you still may have gain attributed to you). It is reported on 1099-DIV, and if it is 0 - then you don't have any. If you sold a stock, your broker should have given you 1099-B (which is not the same as 1099-DIV, but may be consolidated by your broker into one large PDF and not provided separately). On 1099-B the sales proceeds are recorded, and if you purchased the stock after 2011 - the cost basis is also recorded. The difference between the proceeds and the cost basis is your gain (or loss, if it is negative). Fees are added to cost basis. A purchase of a stock is not a taxable event. No 1099 to worry about.  Welcome to Money.SE No. Black Scholes includes a number of variables to calculate the value of the derivative but taxation isn't one of them. Whether you are trading options or futures, the dividend itelf may be part of the equation, but not the tax on said dividend.