Law Commons^™

Financial Options In The Real World: An Economic And Tax Analysis, David M. Hasen

Faculty Publications

Many of the consequences of issuing and purchasing options on publicly traded property have been well understood since Black and Scholes developed a model for option pricing. No model of options, however, provides an accurate economic analysis of the actual transactions that issuers and purchasers engage in when options are bought and sold. One consequenceof this gap in understanding is that the rules for taxing options remain poorly developed. This Article provides a transactional analysis of option sales for the first time. The focus is on covered options, but the analysis also has implications for options in which the underlying …