Stock Options & Security Lending

[ether]

I've started selling OTM covered calls via robinhood to beef up my yield a couple basis points.
I just discovered the world of security lending and was wondering if anyone engages in security lending via their preferred broker.

Can I lend my fully paid security to my broker and sell calls on those same securities?

[Chris]

Be careful when yield boosting using covered calls:

"Call options sold against the stock during this period must have expiration periods longer than 30 days and out-of-the money strike prices. If your covered call trade does not meet these criteria, any dividends earned are taxed at your regular income tax rate."
https://finance.zacks.com/taxation-cove ... -1262.html

[ether]

Strange that it converts my long term dividends into short term gains

[jacob]

Writing options ITM cuts your volatility more than half and subjects you to the possibility of a near sale, so it makes sense that dividends would be taxed as income since they're now part of an income strategy. Not a holding strategy.

Actually, what's weird is that dividends are qualified even if you haven't held the stock for 1yr+.