### Question
How does Income Taxes define qualified covered call option?


### Answer
Under *26 U.S.C. § 1092*, **qualified covered call option** is defined as:

> any option granted by the taxpayer to purchase stock held by the taxpayer (or stock acquired by the taxpayer in connection with the granting of the option) but only if—


(i) such option is traded on a national securities exchange which is registered with the Securities and Exchange Commission or other market which the Secretary determines has rules adequate to carry out the purposes of this paragraph,


(ii) such option is granted more than 30 days before the day on which the option expires,


(iii) such option is not a deep-in-the-money option,


(iv) such option is not granted by an options dealer (within the meaning of section 1256(g)(8)) in connection with his activity of dealing in options, and


(v) gain or loss with respect to such option is not ordinary income or loss

#### Citation:
  - *26 U.S.C. § 1092*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter O-Gain or Loss on Disposition of Property > PART VII-WASH SALES; STRADDLES**

