On January 31,2013,Mallory pays $800 for an option to acquire 100 shares of Mesa Corporation common stock for $85 per share.As a result of an increase in the market value of the Mesa stock,the market price of the option increases and Mallory sells the option for $1,000 on August 4,2013.As a result of the sale,Mallory must recognize

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Mallory's gain from selling the option is $200 ($1,000 - $800). Since the option was held for less than a year, the gain is considered a short-term capital gain (STCG).

On January 31,2013,Mallory Pays $800 for an Option to Acquire