How not to pay taxes on covered call

Question

I bought 100 shares of ESPO four months ago for $50 and sold a September 18 $62 covered call at Robinhood.
With the stock  trading at $61.50, I think that it's likely that I will be assigned.  I will need to pay taxes on the gain $1,200  short term capital gain.
I am considering a buy of 100 more shares of ESPO if the stock hits $62 but the collateral is tied to the shares that I already own and not the ones that I will buy. Is there any way to change the collateral from the original 100 shares to the newly purchased 100 shares?
I completely understand the risk that the stock can drop below $62 right after I buy more shares.  I don't mind if that happens since  I really like this stock.

Bob Baerker · Answer

With multiple stock purchases (or shorts), when selling, the default is First In/First Out (FIFO) unless you designate the lot to be sold.  I don't know if you can do this substitution with a covered call.  Speak to your broker about this.
Besides that possibility, there are two other choices that involve options. Note that these are very illiquid options with low open interest, low daily volume and very wide bid/ask spreads.

Buy to close the short call so that you will not be assigned. Put in a low ball limit order and see if you get lucky.

Roll the short call up a strike and possibly out a month.

In both cases, you'd have to do a bit of legwork to determine what fair value is.

How not to pay taxes on covered call

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