Hi everybody, First of all I apologize for the long post. I have a stock that has appreciated and I want to protect against losses using a collar options strategy. I am uncomfortable however with the possibility that if the stock keeps going up, I may have to sell it if the call is in the money at expiration and gets exercised, which can trigger a hefty tax liability. I thought of a way to avoid this drawback, but I want to make sure it will work as intended, and wonât raise any issues with the IRS. Letâs say I own 100 shares of XYZ, the current price is 45 and the call strike price is 50. If the stock reaches 50 at any time during the life of the call, I buy another 100 shares of XYZ at 50 and I hold to it until call expiration. If the call is in the money at or right before expiration, I have a couple of choices: - I buy back the call right before expiration and instruct the broker to sell the 100 shares of XYZ purchased at 50, for a slightly negative overall net return, due to commissions and the low remaining time value. - I wait until the call expires and when it gets exercised, I instruct my broker to sell the 100 shares I purchased at 50 (also for a slightly negative value due to commissions). In both cases my overall gain/loss will be slightly negative, but I will be able to continue to hold the original 100 shares of XYZ. This is a simplified case, as in reality the stock may keep moving up and down around the call strike price, in which case I would have to keep selling and buying the extra 100 shares. I checked with my broker and they allow customers to specify which shares to sell (by entry transaction id) during the exit trade settlement period. As far as I know, this is also allowed by the IRS regulations (or the broker would not offer it to their customers). Does this strategy make sense from a purely trading standpoint, and also from a tax standpoint? Thanks!