The previous articles covered contracts for difference, spot trading and futures and perpetual futures. In all three the income landed in one or two provisions that could be identified fairly quickly. Options are different. The Income Tax Act names an option in two places at once, and which of the two applies determines, among other things, whether the 500 euro exemption is available at all.
What an option is
An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying at a price fixed in advance up to a stated date. The seller of the option holds the mirror position: no right, but an obligation. If the buyer exercises, the seller must perform.
That asymmetry is the single thing separating an option from every other derivative. With futures and with CFDs both sides are bound equally. With an option only one side is.
A call gives the right to buy, a put the right to sell. The strike is the price at which the right is exercised. Expiry is the last day the contract is valid. The premium is the price the buyer pays the seller on opening the position, and it is non-refundable regardless of how the trade ends.
By exercise style there are European options, exercisable only on the expiry date, and American options, exercisable at any point up to expiry. The difference is purely practical: with American style a writer can be assigned weeks before expiry and has to perform earlier than expected.
Premium, intrinsic value and time value
The premium has two components. Intrinsic value is the amount by which the option is in the money. For a call with a strike of 100 and the underlying at 108, intrinsic value is 8. If the underlying sits below the strike, intrinsic value is zero, never negative.
The rest of the premium is time value. It reflects the probability that the option moves further into the money before expiry, and it declines as time runs out. The decline accelerates towards the end of the contract's life, so an out-of-the-money option loses value even on days when the underlying does not move at all.
The main input into time value is implied volatility, meaning the expected range of movement in the underlying. A rise in implied volatility lifts the premium on calls and puts simultaneously. This is where most buyers lose: the underlying moves in the right direction but the premium falls, because implied volatility collapses once the anticipated event has been announced.
The four basic positions
| Position | Premium | Gain | Loss |
|---|---|---|---|
| Long call | paid | unlimited to the upside | capped at the premium |
| Long put | paid | capped at a zero underlying | capped at the premium |
| Short call | received | capped at the premium | unlimited if uncovered |
| Short put | received | capped at the premium | capped at a zero underlying |
For the buyer the maximum loss is known in advance and equals the premium paid. For the writer the maximum gain is known in advance and equals the premium received, while the loss is not known. That is why brokers require margin on written positions and why those positions sit behind a higher permission level on the account.
Who creates an option
The exchange does not issue options. It only defines the series, meaning the underlying, the strike, the expiry date, the contract size and the settlement method. It builds the shelf, not the goods on it.
The contract itself comes into existence only through a trade. When an order opening a long position meets an order opening a short one, a new contract that did not previously exist is created and open interest rises by one. This is the substantive difference from shares. The number of shares is set by the issuer and is fixed, whereas the number of options is set by nobody. Open interest in a single series can in theory exceed the number of shares in issue.
That is why the term is writing an option. The writer buys it from no one, they create it. There is no institution issuing options on the supply side, only whoever is willing to take on the obligation and post margin.
Open interest is derived from how orders are marked. The clearing house pairs opening and closing trades and publishes the figure only after the trading day has closed. Where an opening order meets a closing one, open interest does not change and the position simply moves to a different holder.
Once the trade is done, the clearing house steps in between the parties, in the United States the Options Clearing Corporation, in Europe Eurex Clearing. By novation it becomes the buyer to every seller and the seller to every buyer. The consequence is practical: the holder's counterparty is not a particular writer but the clearing house. That is precisely why a position can be closed at any time without tracking down whoever originally sold you the option.
Assignment follows from the same structure. When a holder exercises, the clearing house selects at random a clearing member holding a short position in the same series, and the broker then identifies a particular client using a method approved in advance, usually random selection or the age of the position. The writer who gets assigned is therefore not the counterparty of the person who exercised. They were picked by a draw.
In practice the other side of a retail purchase is a market maker. They quote both bid and offer continuously and do not bet on direction, hedging in the underlying and earning the spread between their quotes. They are the reason an option can be bought even when no other trader wants to sell in that series.
With crypto-assets this structure is absent. Deribit has no separate clearing house, it runs its own matching and risk engine, sources liquidity through a network of market makers, and in place of a clearing fund holds an insurance fund with incremental automatic liquidation of positions. The counterparty is therefore the platform itself and its own risk, not a regulated central counterparty.
Over-the-counter and employee options are a separate case. They do not arise from matched orders but are issued by one specific counterparty, a bank or an employer, and no secondary market exists for them. That is part of the reason the definition of an employee option requires that it cannot be transferred.
This also explains one of the tax conclusions below. Only what you hold can be transferred. The writer holds nothing and creates an obligation, so their result is not a transfer of an option under paragraph (d) but a derivative transaction under paragraph (k).
The three ways an option ends
An open option position can be closed out in three ways, and each carries different tax consequences. This split governs the rest of the article.
Sale before expiry. The holder sells the contract on the market to another participant. This is the most common ending in retail trading, and in the language of the Act it is a transfer of an option.
Exercise. The holder uses the right and acquires or sells the underlying at the strike. The option is extinguished and a position in the underlying takes its place.
Expiry without exercise. The option lapses worthless. The buyer has lost the premium, the writer has kept it.
Two paragraphs of the Act, not one
The Income Tax Act names an option in two places.
Section 8(1)(d) deals with income from the transfer of options. Under section 8(5) the deductible expense is the purchase price demonstrably paid for the option together with costs connected with its acquisition and sale.
Section 8(1)(k) deals with income from derivative transactions. Under section 8(11) the deductible expense is fees and similar payments connected with carrying out derivative transactions and costs connected with settling them.
An option is a derivative, so both provisions formally fit it. The Act does not define the boundary between them and no methodological guidance has been published on this specific question. The defensible dividing line follows what actually happened in the trade. If the taxpayer transferred a contract they held, it is a transfer of an option under paragraph (d). If the position was settled by a monetary difference without the taxpayer transferring anything to anyone, it is a derivative transaction under paragraph (k).
In practice that means closing a purchased option by selling it on the exchange points to paragraph (d), while cash settlement of an index option at expiry and the outcome of a written option point to paragraph (k). Whoever applies a classification should be able to justify it from the trade log rather than from a single annual summary figure.
The 500 euro exemption, and why CFDs never reach it
The difference between those two paragraphs is not academic.
Under section 9(1)(i), income under section 8(1)(d) to (f) is exempt where the total of that income, reduced by the expense under sections 8(5) and 8(7), does not exceed 500 euro in the tax period. Where the difference exceeds that amount, only the part above it enters the tax base.
Paragraph (d) is within that range. Paragraph (k) is not. Income from the transfer of options therefore has the exemption, income from derivative transactions does not. With CFDs, with forex and with futures the exemption is unreachable, with options it is not.
The test also runs on the difference between income and expenses rather than on gross income. That is where paragraph (i) departs from paragraph (g), under which the 500 euro is tested on income directly. Where the taxpayer also has income from occasional activities under section 8(1)(a) or from letting under section 6(3), the two exemptions merge into a single shared ceiling of 500 euro.
The one-year test does not apply to options. The holding-period exemption under section 9(1)(k) is drafted for sales of securities under paragraph (e) admitted to trading on a regulated market. An option is not a security, and paragraph (d) is not mentioned in that provision. Holding an option for twelve months therefore changes nothing.
The only route to a full exemption is long-term investment saving. Under section 9(1)(l), income from the sale of securities, of options, and income from derivative transactions arising from long-term investment saving is exempt once the conditions of the special regulation are met, including income paid out after fifteen years from its start. It is the only place in the Act where all three categories are exempt at once.
Losses do not flow between categories
Under section 8(2) the tax base is computed separately for each type of income under section 8(1), and where the expenses connected with an individual type exceed the income, the difference is disregarded. A loss on the transfer of options under paragraph (d) therefore cannot be set against a gain on derivatives under paragraph (k), or the other way round. Nor can it be set against sales of securities under paragraph (e) or sales of crypto-assets under paragraph (t).
In its statement on derivative transactions the Financial Directorate takes the position that only closed positions count as income, and that the return asks not for gains or losses but for income and expenses in gross terms. A year that ends in an economic loss can therefore still trigger an obligation to file.
Exercise: the premium moves into the acquisition cost
On exercise there is no income from the transfer of an option, because no transfer took place. The option was extinguished by the right being performed.
The premium paid is not lost in that case but moves into the acquisition cost of the asset acquired. The accounting procedures apply the same principle, under which the option premium increases the acquisition cost of the property acquired when a purchased call is exercised.
What happens next is governed by what the underlying is. If it is shares, their later sale is income under section 8(1)(e) and, where the conditions are met, it can reach the one-year test under section 9(1)(k). If the underlying is a crypto-asset, the later sale is income under section 8(1)(t) and no time test exists there.
Exercising a call on shares can therefore be more favourable in tax terms than selling the option, but only where the taxpayer actually holds the acquired shares for more than a year. That reasoning is also the only point in this whole article at which a one-year test is reachable for options at all, and only indirectly, through the underlying shares.
Writing an option
The writer receives the premium immediately on opening the position but takes on an obligation to perform. The risk is asymmetric: the gain is capped at the premium received, while the loss on an uncovered written call is not capped at all.
The premium received is not income from the transfer of an option, because the writer transferred nothing. They created and sold an obligation. The classification therefore points to paragraph (k) as a derivative transaction, with all the consequences that follow, including no 500 euro exemption.
The moment at which the income arises is contested for written options and deserves attention. Applying the Financial Directorate statement cited above, under which only closed positions count as income, the premium received becomes income only once the position is extinguished, meaning on buy-back, on assignment or on expiry. For a contract opened in December and closed in January that shifts it into the following tax period.
Assignment of a written call produces a sale of the underlying at the strike, assignment of a written put a purchase of the underlying at the strike. In practice the premium received is allocated to that same transaction, increasing the sale proceeds where the underlying is sold and reducing the acquisition cost where it is bought. The Act does not expressly regulate that allocation, so it is worth documenting it in the records clearly enough to be readable on inspection.
Options on shares and indices: where they can be bought
Exchange-traded options on shares and indices are standardised contracts. In the United States a single equity contract usually covers a hundred units of the underlying and clearing is handled by the Options Clearing Corporation. In Europe the bulk of the volume sits on Eurex, which lists contracts on European shares and on the DAX and Euro Stoxx 50 indices.
A Slovak retail client reaches them through brokers with access to those markets. The broadest offering comes from Interactive Brokers and its introducing brokers, among them LYNX, CapTrader and MEXEM, since they run on the same infrastructure. Saxo Bank also offers options and Degiro does so on a limited range of markets. CFD-focused platforms such as XTB or Trading 212 do not offer exchange-traded options, although they may carry products with a similar-sounding name.
Access is constrained by the PRIIPs Regulation. An option is a packaged investment product under it, and a broker may not let a retail client buy one where no key information document is available for that contract. The same rule is the reason a retail client in the European Economic Area cannot buy US-listed ETFs, as covered in the article on the differences between ETFs, ETCs and ETNs. Reclassification as a professional client removes the obstacle but also lowers the level of protection.
For tax purposes the settlement method is what matters. Options on single shares are usually physically settled, so exercise means delivery of the shares. Index options, for example on the S&P 500 under the symbol SPX, are cash-settled, because an index cannot be delivered. With cash settlement no position in the underlying ever arises and the outcome remains a derivative transaction under paragraph (k).
Employee options are a separate category
An option granted by an employer has nothing to do with section 8 and is classified somewhere else entirely.
Under section 5(3)(b), an employee's income is the difference between the higher market price of an employee share and the price of that share guaranteed by the employee option on the day the option is actually exercised, reduced by the amount the employee paid to acquire the option. Under the same provision an employee option means only an option acquired from the employer or from an economically connected company which cannot be transferred. Transferability is the decisive feature here.
The consequences for the employee differ sharply from traded options. This is employment income, so it is taxed together with salary and enters the assessment bases for both social and health insurance. The 500 euro exemption under section 9(1)(i) does not reach it, since that provision covers income under section 8. It is taxed on the day of exercise rather than on the day the shares are sold, so the liability arises before the employee has realised anything in cash.
On a later sale of the acquired shares the income falls under section 8(1)(e), and under section 8(5)(e) the deductible expense includes the non-cash income under section 5(3)(b) already taxed under section 35. That provision prevents the same value being taxed twice and is routinely overlooked in practice.
RSU-type plans do not meet the definition of an employee option, because the employee has no choice to make and exercises nothing. Their classification is assessed separately according to the terms of the particular plan.
Options on crypto-assets: where they can be bought
The market in options on crypto-assets is concentrated in a single venue to a degree with no parallel elsewhere in finance. On the available estimates Deribit has long held around 85 per cent of global crypto-asset options volume, and in 2024 more than a trillion dollars passed through the platform. In May 2025 Coinbase announced its acquisition for approximately 2.9 billion dollars and the transaction closed in August 2025. Deribit is therefore now part of Coinbase.
The other venues are OKX, Bybit and Binance, where market depth in options is markedly thinner than in perpetual futures. Options on spot bitcoin ETFs, above all on the iShares Bitcoin Trust, trade on US exchanges and are growing fast, but for a European retail client they are effectively out of reach for the reason set out above.
Availability for a client in Slovakia is a separate layer again. The transition periods under the MiCA Regulation closed on 1 July 2026, and leveraged crypto-asset products may be offered to a retail client in the union only by an entity holding both a CASP licence under MiCA and an authorisation under MiFID II. Few hold both so far. Deribit routes eligible retail derivatives clients to its Panama entity outside that framework. Kraken has announced options with a European launch in the second half of 2026, subject to regulatory approvals. Crypto.com obtained a MiFID II authorisation through the Cypriot CySEC in December 2025.
The provider's licence is irrelevant to the tax classification of the income. The same conclusion applied to CFDs and to perpetual futures.
Taxation of crypto options and the two tax layers
An option on a crypto-asset is a derivative and its outcome falls under section 8(1)(k), exactly as with CFDs and perpetual futures. It is not a sale of a crypto-asset under paragraph (t), because on cash settlement no crypto-asset is transferred.
Contracts on Deribit are cash-settled and most are denominated either in the coin itself or in a stablecoin. The same two-layer problem arises as with perpetual futures. The result of the option transaction falls under paragraph (k), while the collateral in which the account is held has a tax life of its own under paragraph (t).
On an account margined in bitcoin that means three separate things. Swapping another crypto-asset into the collateral is a sale under section 2(ai) and is taxed under paragraph (t). The option trading itself is a derivative transaction under paragraph (k). A later transfer of the collateral into euro or into another coin is again a sale under paragraph (t).
Valuation is layered on top. A premium paid or received in bitcoin is a non-cash consideration and under section 2(c) is valued at the price commonly used at the place and time of performance. In practice that means a conversion as at the date of each individual trade, not an average rate for the year. Where income arises in a foreign currency, it is converted under the procedure in section 31(2) of the Act.
Where an option is physically settled and the taxpayer acquires the coin on exercise, the premium moves into its acquisition cost under section 25b and the later sale is income under paragraph (t).
A worked example
A taxpayer traded on two accounts during 2026. With a European broker they bought forty call options on shares, sold twenty-eight of them before expiry and let twelve lapse worthless. In parallel they traded bitcoin options on a crypto platform.
Equity options, section 8(1)(d). Income from transferring the twenty-eight contracts came to 9,400 €. The expense under section 8(5) is the purchase price of those same contracts together with commissions, 8,600 €. The difference is 800 €. The premium on the twelve lapsed options cannot be claimed, because no transfer occurred and there is no income for that expense to attach to. The test under section 9(1)(i) runs on the difference: 800 € exceeds 500 €, so 300 € enters the tax base.
Crypto options, section 8(1)(k). Positive settlements and premiums received totalled 31,200 €, negative settlements together with trading fees 29,900 €. The tax base is 1,300 € and no exemption reaches it.
The partial tax base under section 8 is 1,600 €. Tax in the first band at 19 % is 304 €, the health insurance contribution at 16 % is 256 €, together 560 €. Without the exemption under paragraph (i) the base would have been 2,100 € and the amount payable 735 €. The difference of 175 € is the entire practical effect of one of the two categories sitting under paragraph (d).
The crypto platform account was funded by swapping bitcoin into collateral worth 15,000 €. That swap is separate income under section 8(1)(t), valued at market value as at the date of the swap, and has nothing to do with the tax on the options.
The obligation to file is assessed on the total of taxable income, not on profit. For 2026 the threshold is 2,983.37 €. A taxpayer with gross income of 40,600 € from option trades exceeds it even in a year that ends in a loss.
What to record
The Act does not prescribe the form of the records, but it does require the figures to be capable of proof on inspection. For each contract you need the date and time of opening and closing, the underlying, the option type, the strike, the expiry date, the number of contracts, the premium paid or received, fees and the settlement currency. How the position ended has to be flagged separately, meaning whether it was sold, exercised, assigned or allowed to lapse. That single field decides between paragraph (d) and paragraph (k) and cannot be reconstructed from an annual summary.
For exercised and assigned contracts the records also need to carry the resulting position in the underlying, with the acquisition cost increased or reduced by the premium. Crypto options add the valuation of the premium as at the trade date and a separate record of collateral acquisition costs under section 25b, covered in the article on crypto taxation.
Download exports as the year goes along. Most platforms expose the trade history, the record of exercises and assignments, and the fee summary in separate files, and some of them cap export depth at a few months. An annual summary statement usually shows a single net result, from which the two columns of the return cannot be derived after the fact.
This article is a general overview, not individual tax advice, and it is neither investment nor product advice. Splitting option trades between section 8(1)(d) and paragraph (k), valuing premiums denominated in crypto-assets and separating the derivative result from the movement of the collateral are a routine part of the work kryptotax.sk does for clients. 🇸🇰