EyeCantSpel
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I'm not sure if this would be legal but anyway I was thinking of this.
Basically you take advantage of the fact that if you make money trading index futures you pay 60/40. 60% capital gains / 40% ordinary income
1) This must be true... If you make $100,000 trading stocks and lose $100,000 trading the S&P index futures you'll owe 0 in taxes.
so... if you have made 200,000 for the year trading only stocks this is what you do.
Obtain a $HIT load of leverage and say go long 10,000,000 worth of ES futures, and go short 10,000,000 worth of SPY, the stock. Here's what might happen
Scenario A:
the market rallies 2% and you make $200,000 on the ES futures, but lose 200,000 of stock losses. So for the year you had made 200,000 in stock, but now lost 200,000 in stock, but you made 200,000 trading index futures.
So now rather than paying taxes on 200,000, you get the special tax treatment of 60/40 because all your gains were on the index futues.
Scenario B:
your plan doesn't work out, the market sells off and you loose 200,000 on you index futures, and make 200,000 on your stock. So you have made 400,000 on stock, but have a write off of 200,000 on your futures loss which is = to 200,000 you have to pay at ordinary income.
Obviously you want scenario A to happen, however if it doesn't w/ scenario B you end up paying exactly the same amount had you not attempted this
Basically you take advantage of the fact that if you make money trading index futures you pay 60/40. 60% capital gains / 40% ordinary income
1) This must be true... If you make $100,000 trading stocks and lose $100,000 trading the S&P index futures you'll owe 0 in taxes.
so... if you have made 200,000 for the year trading only stocks this is what you do.
Obtain a $HIT load of leverage and say go long 10,000,000 worth of ES futures, and go short 10,000,000 worth of SPY, the stock. Here's what might happen
Scenario A:
the market rallies 2% and you make $200,000 on the ES futures, but lose 200,000 of stock losses. So for the year you had made 200,000 in stock, but now lost 200,000 in stock, but you made 200,000 trading index futures.
So now rather than paying taxes on 200,000, you get the special tax treatment of 60/40 because all your gains were on the index futues.
Scenario B:
your plan doesn't work out, the market sells off and you loose 200,000 on you index futures, and make 200,000 on your stock. So you have made 400,000 on stock, but have a write off of 200,000 on your futures loss which is = to 200,000 you have to pay at ordinary income.
Obviously you want scenario A to happen, however if it doesn't w/ scenario B you end up paying exactly the same amount had you not attempted this
