Glossary
Options & concentrated-stock terms
Plain-English definitions of the vocabulary behind option overlays, hedging, and tax-smart strategy for concentrated positions.
Cash-secured put
A cash-secured put is selling a put option while setting aside enough cash to buy the stock at the strike if assigned — collecting premium to potentially acquire shares at a lower net price.
Read definition →Constructive sale
A constructive sale (IRC §1259) treats an appreciated position as sold for tax purposes — triggering gain — when you hedge it so completely that you have effectively locked in the value without selling.
Read definition →Covered call
A covered call is selling a call option against stock you already own, collecting premium in exchange for capping the upside above the strike.
Read definition →Defined-outcome strategy
A defined-outcome strategy uses a package of options to shape a known range of returns over a set period — typically a downside buffer or floor in exchange for a capped upside.
Read definition →Exchange fund
An exchange fund pools concentrated single-stock positions from many investors into a diversified partnership, deferring tax on the contributed gain in exchange for a multi-year lockup.
Read definition →Option collar
A collar holds stock, buys a protective put below the price, and sells a covered call above it — the call premium offsets the cost of the put, defining a floor and a ceiling.
Read definition →Prepaid variable forward
A prepaid variable forward (PVF) advances cash today against a future delivery of a variable number of shares — giving liquidity and partial hedging while deferring the sale, within constructive-sale limits.
Read definition →Protective put
A protective put is buying a put option on stock you own, paying premium for the right to sell at the strike — insurance that sets a floor under the position.
Read definition →Put-write strategy
A put-write strategy systematically sells (writes) put options against cash collateral to harvest option premium as a return stream, typically using index puts.
Read definition →Qualified covered call
A qualified covered call (QCC) is a covered call that meets IRC §1092 strike and term tests, so it is exempt from the straddle rules and does not suspend the holding period of the underlying stock.
Read definition →Straddle rules
The straddle rules (IRC §1092) defer losses and can suspend a holding period when you hold offsetting positions — such as stock and an option that hedges it — to prevent tax-motivated loss harvesting.
Read definition →Structured note
A structured note is a debt security issued by a bank whose payoff is linked to an underlying asset, bundling option-like exposure into a single instrument with embedded fees and issuer credit risk.
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