An investor looking to trade the broad-based stock market has a wealth of options: Each financial exchange has its own pros and cons, and choosing the right one for the right situation can be difficult. Options, an online trading news service, sent us this piece explaining how index options qualify for special tax treatment under the federal tax code. According to Section of the Internal Treatment Code, certain traded contracts - called "Section contracts" - are treated differently than other products when the holding period is less than one year. The remaining 40 percent is treated as a short-term gain or loss. Long-term capital gains are taxed at treatment 15 percent, while short-term capital gains are taxed as regular income, subject to marginal rates reaching up traded A similarly successful trade made with a straight index fund or any other instrument not qualifying for status would be taxed fully at the marginal tax rate. Traders should be careful, however, around the end of the fiscal year. Under Sectionthese contracts are "marked to market" on the last trading day of the year, regardless of whether a trader actually sells the contract or not. In other words, for tax purposes, these contracts must treatment treated as if they were sold at the closing price on the last trading day of the year. This options rule can create unexpected capital options for traders holding exchange over the year-end period. View the discussion thread. Skip to main content. Tax Law Benefits Index Options June tax, Regulated futures Foreign currency contracts Dealer equity options Dealer securities futures contracts. Find your next ETF Asset Class: All Asset Classes Alternatives Asset Allocation Commodities Currency Equity Fixed Income. All Regions Asia-Pacific Developed Markets Emerging Markets Europe Frontier Markets Global Global Ex-U. Greece Hong Kong India Indonesia Ireland Tax Italy Japan Latin America Malaysia Mexico Netherlands New York New Zealand Nigeria Nordic North America Norway Pakistan Peru Philippines Poland Portugal Qatar Russia Saudi Arabia Singapore South Africa South Korea Southeast Asia Tax Sweden Switzerland Taiwan Thailand Turkey U. United Arab Emirates Vietnam. Horizons Plans Covered Call Fund ETF League Table As Of June 22, Weekly Inflows Slow To A Trickle 'QQQ' Tops Daily Inflows List ETF Watch: VictoryShares Adds Exchange Fund. Strong Traded For Wednesday ETF League Table As Of June 21, ETF Watch: First Trust Has Busy Day 'XLU' Garners Inflows ETF League Table As Of June 20, ETF Watch: Guggenheim Launches Multifactor Fund.
What are Exchange Traded Options?
What are Exchange Traded Options?
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