What statement about call option writers is EXCEPT?

The statement regarding call option writers that stands out as an exception is that all unprofitable closing transactions are allowed as an ordinary loss deduction from income. When writers of call options engage in unprofitable transactions, these losses are typically classified as capital losses rather than ordinary losses. This distinction is significant because capital losses can only be deducted against capital gains, and if there are no capital gains, they can be carried forward to offset future capital gains but cannot reduce ordinary income directly.

On the other hand, the other statements about call option writers reflect correct aspects of the mechanics and financial implications of options trading. Gains from options are generally classified as capital gains, aligning with how financial instruments are treated under tax regulations. The risk associated with writing call options is largely confined to the premium received, making it appear limited; however, the writer could face larger losses if the market price of the underlying asset rises substantially. Finally, the writer could indeed find themselves needing to buy shares at a higher market price if the option is exercised by the holder, leading to potential financial exposure.