Say I own 5000 shares of xyz with a cost basis of $5, price has risen to $10.
I decide to open a spread option, so I sell 50 options at price $15 for the premium a year away, and buy 50 options at $14 for the same date, hoping the price increases.
Now say the price increases to $16. So my $15 options are exercised and I lose my shares, but I buy them back at $14 when i exercise the 50 options I bought.
I'm trying to figure out what taxes I would owe. If you can do sorry and long term gains, I would appreciate it.