Option Income

Option income commonly refers to premiums and realized results generated by selling or otherwise using options. The accounting and tax treatment depend on the strategy and transactions.

Why this matters to income investors

Closed-end funds and other strategies may use option premiums to support distributions, but the strategy can limit upside and its cash receipts are not automatically recurring earnings.

How to use option income in your research

Identify whether the fund writes covered or uncovered options, review realized and unrealized results, and compare option-related cash flow with the distribution.

This material is general education and information, not individualized investment, tax, or legal advice.