### Question
How does the law define equity option?


### Answer
Under *26 U.S.C. § 1256*, **equity option** is defined as:

> any option—


(i) to buy or sell stock, or


(ii) the value of which is determined directly or indirectly by reference to any stock (or group of stocks) or stock index

#### Citation:
  - *26 U.S.C. § 1256*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART IV-SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

