STRADDLES.

SEC. 210. STRADDLES. (a) Treatment as Short-Term Capital Gain.— Section 1234 (relating to options) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: “(c) Special Rule for Grantors of Straddles.— “(1) Gain on lapse.—In the case of gain on lapse of an option granted by the taxpayer as part of a straddle, the gain shall be deemed to be gain from the sale or exchange of a capital asset held for not more than 6 months on the day that the option expired. “(2) Exception.—This subsection shall not apply to any person who holds securities for sale to customers in the ordinary course of his trade or business. “(3) Definitions.— For purposes of this subsection— “(A) The term ‘straddle’ means a simultaneously granted combination of an option to buy, and an option to sell, the same quantity of a security at the same price during the same period of time. “(B) The term ‘security’ has the meaning assigned to such term by section 1236(c).” (b) Effective Date.— The amendments made by subsection (a) shall apply to straddle transactions entered into after January 25, 1965, in taxable years ending after such date.