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Abstract: 

The American Jobs Creation Act of 2004 significantly modifies certain aspects of the straddle rules.1 One change that did not happen was a provision in the Senate’s version of the bill that would have limited the qualified covered call option exception to options traded on a national securities exchange, something opposed by, among others, the New York State Bar Association. 2 The Act did, however, streamline the “identified straddle” regime, repeal the stock exception as to shorts against the box, and describe a two-step transaction treatment in the physical settlement of a straddle position that, if terminated, would result in realization of a loss.

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