The tax advantages of a qualified covered call
if you’ve already decided on using covered calls
Basis Northwest 2026 is sold out. The waitlist has 40 people on it. We expect to release another 5 or so seats this week and next. The best way to stay up to date on future Basis events is via Tax Alpha Insider.
🍔 Advisers arriving early to Basis Northwest: We may have a late lunch on Weds, May 27, 2026.
The tax advantages of a qualified covered call
A covered call is a short call written on some underlying.
Covered calls have been around forever, but they’re especially popular now because “income” ETFs have exploded in popularity.
Under some conditions, if the call and the underlying hedge are substantially offsetting, the dreaded straddle rules kick in.
Speaking loosely, the straddle rules do two things:
Qualified dividends lose their qualified status
Harvested losses are deferred instead of recognized
But… there’s a statutory way to avoid straddle treatment if the covered call is Qualified.
How does that work?
