During year 1, Jane purchases 100 shares of the stock of XYZ Corp. for $10 each, and John, her husband, purchases a put option on 100 shares of XYZ stock, with a strike price of $9.50, for a premium of $50. The value of the stock goes down, and Jane sells her XYZ stock for $9 a share late in year 1. Johns option is worth $90 at the end of year 1, and the option cash-settles during year 2 with a payment of $125 to John. What are the tax consequences of these transactions?