Question
Trying to understand what a straddle is for income tax purposes
Suppose an investor is looking at the stock for company XYZ (a name I made up). He feels the stock is fairly priced. He sells a call and a put with the same expiration on the XYZ stock. I claim, for tax purposes, this is a straddle. Now, if the strike price of the call is slightly higher than the strike price of the put, I claim it is still a straddle. However, is it still a straddle if the strike price of the call is 40% higher than the strike price of the put?
