On January 31 of this year, Mallory pays $800 for an option to acquire 100 shares of Mesa Corporation common stock for $85 per share. As a result of an increase in the market value of the Mesa stock, the market price of the option increases and Mallory sells the option for $1,000 on August 4. As a result of the sale, Mallory must recognize
A. $800 ordinary income.
B. $200 ordinary income.
C. $800 STCG.
D. $200 STCG.
Answer: D
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