Dan owns $500$ shares of Rocket Corporation common stock. The stock was acquired two years ago for $$30$ per share. On October $2,2024,$ Dan writes five calls on the stock,

which represent options to buy the $500$ shares of Rocket at $$75$ per share. For each call, Dan receives $$210.$ The calls expire on June $22,2025.$

Read the requirements.

Requirement a$.$ Describe the tax treatment for Dan if the five calls are exercised on December $4,2024.$

Requirements

Consider the following transactions and describe the tax treatment for Dan:

a$.$ The five calls are exercised on December $4,2024.$

b$.$ The calls are not exercised and allowed to expire.