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An investor buys a stock at the beginning of the year for $50. At the end of the year, the stock is trading for $40.
An investor buys a stock at the beginning of the year for $50. At the end of the year, the stock is trading for $40. The investor sells then stock, takes a tax write off of $10 per share, and immediately buys a call option on the stock. This investor:
has violated the wash sale rule |
has written a covered call |
will be assigned on the call option |
will likely experience a margin call |
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