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whats the difference between a qualified and an unqualified covered call?
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yes, as long as you write a call against your stock with a strike price greater than or equal to the previous day's closing price, with 30 or more days till experation there will be no effect on the holding period of your stock. like you mentioned, unqualified covered calls suspend the holding period of your stock.  for example you sell a deep in the money call (sometimes called the last write) on a stock you have held for 5 years, the covered call is classified as unqualified, the holding period is suspened and the gain or loss on the stock will be treated as short-term. selling out of the money calls or trading in an ira account keeps things simple. the details below have been summarized from an article i found at investorsguide.com.  the article also talks about the implications of rolling a call forward and tax situations where it may be advantageous to write unqualified covered calls (basically when you have a large deferred long term loss). http://www.investorguide.com/article/12618/qualified-covered-calls-special-rules-wo/ two criterion must be met for a covered call to be considered a qualified covered call (qcc). 1) days to expiration must be greater than 30 2) strike price must be greater than or equal to the first available in the money strike price below the previous day's closing price for a particular stock.  additionally, if the previous day's closing price is $25 or less, the strike price of the call being sold must be greater than 85% of yesterday's closing price. 2a) if the previous day's closing price is greater than 60.01 and less than or equal to $150, days to experation is between 60-90, as long as the strike price of the call is greater than 85% of the previous days close and less than 10 points in the money, you can write a covered call two strikes in the money 2c) if the previous day's closing price is greater than $150 and days till expiration is greater than 90, you can write a covered call two strikes in the money.
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