Tax Facts

7598 / When can an over-the-counter option qualify as a qualified covered call option?

Updated: December 30, 2024 at 08:43 AM
Under the regulations, certain over-the-counter options may also qualify as qualified covered call options. A qualifying over-the-counter option is an equity option that is not traded on a national securities exchange registered with the SEC and is entered into with a person registered with the SEC as a broker-dealer or alternative trading system.1 A qualifying over-the-counter option must meet the same requirements outlined in Q 7597 for equity options with flexible terms.2




1.   Treas. Reg. § 1.1092(c)-3(a).

2.   Treas. Reg. § 1.1092(c)-3(b).


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