Premium classification when selling covered calls in a traditional IRA?

Question

If I sell covered calls within a traditional IRA, then is the premium considered a contribution or a capital gain and can I withdraw that money?

Answer 1

If you hold stock in a traditional IRA and sell a covered call against that stock, the premium received for writing that call belongs to the IRA just as would any other gain, dividend, or interest. It is not a contribution but simply adds to the balance in the IRA. The nature of the gain (capital or ordinary) is not relevant since all parts of the IRA balance are treated the same when funds are (eventually) withdrawn.