When exercised, theres no rapid taxable profits, and when held for that essential period of time, any income on sale is taxed as prolonged-expression money gains as opposed to regular revenue.

The worth you pay for an alternative, known as the premium, has two parts: intrinsic benefit and time value. Intrinsic price is definitely the difference between the strike price tag and the share value, If your stock price is over the strike. Time price more info is whichever is left, and variables in how risky the stock is, the time to expiration and curiosity costs, among the other elements.