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a false profit

01/08/24 9:28 AM

#70192 RE: weedisgreen #70191

the percentage increase is the only thing that matters when buying stock or stock options ( profit ) . when a stock that trades on the options market moves 1% in either direction that typically equates to a 10% move in a option contract . one example regarding the position I will acquire , the ACB $5.00 strike expiring 1-17-25 @ around .03 per contract is this strike is considered to be way " out of the money " meaning it's usually considered " risky " . You must ask yourself this -> Do I think ACB could see a $5.00 per share stock price IF the U.S.S.A. reschedules or de-schedules cannabis before maybe October ? Understand options have a expiration date so you're placing a bet that features a restricted time line . One options contract represents 100 shares of stock meaning the calls I'm going to acquire will be each contract for .03 will actually cost me $3.00 , .03 x 100 = $3.00 . I'm thinking 666 contracts . roughly $2000.00 invested . now consider this scenario -> the ACB stock rises to say $2.00 , on some hype , or whatever , that would most likely result in my calls going to .60 per contract . Thats a 2000% increase . The contracts I possess after 1-17-25 will be worth absolutely nothing on 1-18-25 . I would have for the most part a calender year to sell the entire position . Options also feature something called " time decay " which does mean they start to automatically decrease in value starting around 65-70 % into their " lifespan " . Option do require some strategic calculating but 1000 % + gains are rarely experienced buying the stock out right . there is even more involved with options trading than I have mentioned but I suggest to everyone controlling their own fate to learn the details of the options side of the market . now consider ACB hitting $5.00 per share in the next 3-4 months , the contacts that are .03 right now could increase to dollars . now do the math on the potential % increase . unlimited " what if's " .
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Scrapiron

01/08/24 11:59 AM

#70193 RE: weedisgreen #70191

...when does the clock start for long term gains?...

How are stocks taxed?
There are two types of capital gains taxes on realized stock gains:
Short-term capital gains tax
Short-term capital gains tax is a tax on profits from the sale of an asset held for a year or less. Short-term capital gains tax rates are the same as your income tax bracket.
Long-term capital gains tax
Long-term capital gains tax is a tax on profits from the sale of an asset held for longer than a year. Long-term capital gains tax rates are 0%, 15% or 20%, depending on your taxable income and filing status.

Long-term capital gains tax rates are usually lower than those on short-term capital gains. That can mean paying lower taxes on stock sales.