Originally Posted by
Gunfighter
FIFY (he types in a polite, respectful manner, not often seen on the interwebs)
I could have been a little more specific in the original tax question. I'm still at the equity option level, I'm saving futures for when I really hate my kids and want to blow their inheritance. Options on equities are not 1256 contracts based on my pilot level understanding of the tax code. Options on ETFs and individual equities are taxed as ST CG. The difference in tax treatment is one reason it may make more sense to sell options on SPX vs SPY (index vs equity). I'll ask my CPA the next time we talk, probably Jan/Feb. It looks like single trade reporting summed up in an annual P/L is the requirement for my trades.
You are correct. I didn't even think about options on equities. I only trade options on indices because I like my money. The indices are far less volatile than individual stocks and are more ranging in nature. Even when trending as they are now the indices tend to do it in a controlled way. The 1256 tax treatment is key to keeping gains if you are successful. It can be as much as a 15-20% savings.
I love iron condors on SPX.