Gains? Not my experience! My “tax” was 100% of my capital. After 3 years, I learned my lesson.

Option trading is typically short term (not sure about leaps), so any gains (after deducting up to $3000 in losses/yr) would typically be taxed at your normal tax rate.

You can make a lot of money on options, but they can become worthless or leave you owing more money than you sold them for.

30% of the gain

If it is a Section 1256 contract it usually must be marked-to-market at the end of the year and is subject to the 60/40 rule.

(Marked-to-market means “treated as sold at its fair market value on the last business day of the tax year, and you must recognize any gain or loss from that result.” The 60/40 rule says 60% of the gain or loss will be considered a long-term capital gain or loss and the remaining 40 will be considered a short-term capital gain or loss.)

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If you hold a LEAPS call option unhedged over 1 year, the profit or loss will usually be taxed as a long-term capital gain.

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If you exercise a long option, or if you as assigned a short option, the option premium is used to adjust the price of the underlying.

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In other circumstances the gain or loss from an option trade is considered a short-term capital gain or loss and taxed at your marginal tax rate, as any other income would be.

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You should also be aware there is a special set of rules for offsetting positions which may require you to defer a loss to a leter tax year.