In this example, the curriculum makes the point that gains from restricted stocks are treated differently for tax purposes (as ordinary income) than losses incurred from derivative hedges.
I do not understand why the forfeited gain from a collar is treated as a loss. If the stock price ends up above the call strike, the option is exercised and the investor holding short calls
a) delivers shares (no more upside potential) b) receives the call strike c) receives the call premium d) pays the put premium
The lost upside is treated as a capital loss for tax purposes in this example. Why?