Why not speculate at EOY and write the loss off on taxes?

The name of the pictureThe name of the pictureThe name of the pictureClash Royale CLAN TAG#URR8PPP





.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty margin-bottom:0;







up vote
25
down vote

favorite
3












At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.



If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.



Why is this a bad idea?










share|improve this question

















  • 26




    You're thinking tax deductions work like tax credits. They don't.
    – whatsisname
    Sep 19 at 16:39






  • 3




    I know little of the US tax system but if the bet pays of do you not also pay the extra tax over the profit. So that the expectation value is hardly affected. Loss off say 1000 bucks will effectively be less, say 800 for example, which is a good thing. But the say 1000 bucks profit when the bet hits off will also be taxed giving you an effective lower return. In the end I don't see why the math is any different from making a risky investment at any other time.
    – Kvothe
    Sep 19 at 16:58






  • 1




    Are you trying to offset income taxes, or only your capital gains?
    – costrom
    Sep 19 at 17:04






  • 1




    Obligatory Seinfeld: "Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't. But they do. And they're the ones writing it off."
    – Zach Lipton
    Sep 20 at 21:05










  • actually, this ain't always a bad idea; some people do exactly this on EOY (using different financial instruments), because the guaranteed tax reduction bonus offsets at least some of the risk involved. It still requires careful hedging and planning, but it's certainly doable and can be worthwhile.
    – vaxquis
    Sep 20 at 21:28
















up vote
25
down vote

favorite
3












At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.



If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.



Why is this a bad idea?










share|improve this question

















  • 26




    You're thinking tax deductions work like tax credits. They don't.
    – whatsisname
    Sep 19 at 16:39






  • 3




    I know little of the US tax system but if the bet pays of do you not also pay the extra tax over the profit. So that the expectation value is hardly affected. Loss off say 1000 bucks will effectively be less, say 800 for example, which is a good thing. But the say 1000 bucks profit when the bet hits off will also be taxed giving you an effective lower return. In the end I don't see why the math is any different from making a risky investment at any other time.
    – Kvothe
    Sep 19 at 16:58






  • 1




    Are you trying to offset income taxes, or only your capital gains?
    – costrom
    Sep 19 at 17:04






  • 1




    Obligatory Seinfeld: "Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't. But they do. And they're the ones writing it off."
    – Zach Lipton
    Sep 20 at 21:05










  • actually, this ain't always a bad idea; some people do exactly this on EOY (using different financial instruments), because the guaranteed tax reduction bonus offsets at least some of the risk involved. It still requires careful hedging and planning, but it's certainly doable and can be worthwhile.
    – vaxquis
    Sep 20 at 21:28












up vote
25
down vote

favorite
3









up vote
25
down vote

favorite
3






3





At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.



If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.



Why is this a bad idea?










share|improve this question













At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.



If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.



Why is this a bad idea?







united-states taxes






share|improve this question













share|improve this question











share|improve this question




share|improve this question










asked Sep 19 at 3:02









horse hair

1,49521424




1,49521424







  • 26




    You're thinking tax deductions work like tax credits. They don't.
    – whatsisname
    Sep 19 at 16:39






  • 3




    I know little of the US tax system but if the bet pays of do you not also pay the extra tax over the profit. So that the expectation value is hardly affected. Loss off say 1000 bucks will effectively be less, say 800 for example, which is a good thing. But the say 1000 bucks profit when the bet hits off will also be taxed giving you an effective lower return. In the end I don't see why the math is any different from making a risky investment at any other time.
    – Kvothe
    Sep 19 at 16:58






  • 1




    Are you trying to offset income taxes, or only your capital gains?
    – costrom
    Sep 19 at 17:04






  • 1




    Obligatory Seinfeld: "Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't. But they do. And they're the ones writing it off."
    – Zach Lipton
    Sep 20 at 21:05










  • actually, this ain't always a bad idea; some people do exactly this on EOY (using different financial instruments), because the guaranteed tax reduction bonus offsets at least some of the risk involved. It still requires careful hedging and planning, but it's certainly doable and can be worthwhile.
    – vaxquis
    Sep 20 at 21:28












  • 26




    You're thinking tax deductions work like tax credits. They don't.
    – whatsisname
    Sep 19 at 16:39






  • 3




    I know little of the US tax system but if the bet pays of do you not also pay the extra tax over the profit. So that the expectation value is hardly affected. Loss off say 1000 bucks will effectively be less, say 800 for example, which is a good thing. But the say 1000 bucks profit when the bet hits off will also be taxed giving you an effective lower return. In the end I don't see why the math is any different from making a risky investment at any other time.
    – Kvothe
    Sep 19 at 16:58






  • 1




    Are you trying to offset income taxes, or only your capital gains?
    – costrom
    Sep 19 at 17:04






  • 1




    Obligatory Seinfeld: "Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't. But they do. And they're the ones writing it off."
    – Zach Lipton
    Sep 20 at 21:05










  • actually, this ain't always a bad idea; some people do exactly this on EOY (using different financial instruments), because the guaranteed tax reduction bonus offsets at least some of the risk involved. It still requires careful hedging and planning, but it's certainly doable and can be worthwhile.
    – vaxquis
    Sep 20 at 21:28







26




26




You're thinking tax deductions work like tax credits. They don't.
– whatsisname
Sep 19 at 16:39




You're thinking tax deductions work like tax credits. They don't.
– whatsisname
Sep 19 at 16:39




3




3




I know little of the US tax system but if the bet pays of do you not also pay the extra tax over the profit. So that the expectation value is hardly affected. Loss off say 1000 bucks will effectively be less, say 800 for example, which is a good thing. But the say 1000 bucks profit when the bet hits off will also be taxed giving you an effective lower return. In the end I don't see why the math is any different from making a risky investment at any other time.
– Kvothe
Sep 19 at 16:58




I know little of the US tax system but if the bet pays of do you not also pay the extra tax over the profit. So that the expectation value is hardly affected. Loss off say 1000 bucks will effectively be less, say 800 for example, which is a good thing. But the say 1000 bucks profit when the bet hits off will also be taxed giving you an effective lower return. In the end I don't see why the math is any different from making a risky investment at any other time.
– Kvothe
Sep 19 at 16:58




1




1




Are you trying to offset income taxes, or only your capital gains?
– costrom
Sep 19 at 17:04




Are you trying to offset income taxes, or only your capital gains?
– costrom
Sep 19 at 17:04




1




1




Obligatory Seinfeld: "Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't. But they do. And they're the ones writing it off."
– Zach Lipton
Sep 20 at 21:05




Obligatory Seinfeld: "Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't. But they do. And they're the ones writing it off."
– Zach Lipton
Sep 20 at 21:05












actually, this ain't always a bad idea; some people do exactly this on EOY (using different financial instruments), because the guaranteed tax reduction bonus offsets at least some of the risk involved. It still requires careful hedging and planning, but it's certainly doable and can be worthwhile.
– vaxquis
Sep 20 at 21:28




actually, this ain't always a bad idea; some people do exactly this on EOY (using different financial instruments), because the guaranteed tax reduction bonus offsets at least some of the risk involved. It still requires careful hedging and planning, but it's certainly doable and can be worthwhile.
– vaxquis
Sep 20 at 21:28










2 Answers
2






active

oldest

votes

















up vote
110
down vote



accepted










Suppose your tax rate is 20%.



You have earned 5000 coins during the year and now owe 1000 coins in taxes.



Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.



Assuming you can deduct that loss, your net income for the year is now 4000 coins.



You still owe 800 coins in taxes.






share|improve this answer
















  • 23




    In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
    – chili555
    Sep 19 at 14:41






  • 52




    This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
    – Mason Wheeler
    Sep 19 at 15:07






  • 27




    @MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
    – ceejayoz
    Sep 19 at 16:52






  • 14




    @stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
    – Henning Makholm
    Sep 19 at 20:21







  • 6




    @MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
    – AbraCadaver
    Sep 19 at 21:38

















up vote
2
down vote













If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.



Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.



You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.



If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.






share|improve this answer




















  • @stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
    – Bob Baerker
    Sep 21 at 22:06










  • @stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
    – Bob Baerker
    Sep 21 at 22:19










Your Answer







StackExchange.ready(function()
var channelOptions =
tags: "".split(" "),
id: "93"
;
initTagRenderer("".split(" "), "".split(" "), channelOptions);

StackExchange.using("externalEditor", function()
// Have to fire editor after snippets, if snippets enabled
if (StackExchange.settings.snippets.snippetsEnabled)
StackExchange.using("snippets", function()
createEditor();
);

else
createEditor();

);

function createEditor()
StackExchange.prepareEditor(
heartbeatType: 'answer',
convertImagesToLinks: true,
noModals: false,
showLowRepImageUploadWarning: true,
reputationToPostImages: 10,
bindNavPrevention: true,
postfix: "",
noCode: true, onDemand: true,
discardSelector: ".discard-answer"
,immediatelyShowMarkdownHelp:true
);



);













 

draft saved


draft discarded


















StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f100076%2fwhy-not-speculate-at-eoy-and-write-the-loss-off-on-taxes%23new-answer', 'question_page');

);

Post as a guest






























2 Answers
2






active

oldest

votes








2 Answers
2






active

oldest

votes









active

oldest

votes






active

oldest

votes








up vote
110
down vote



accepted










Suppose your tax rate is 20%.



You have earned 5000 coins during the year and now owe 1000 coins in taxes.



Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.



Assuming you can deduct that loss, your net income for the year is now 4000 coins.



You still owe 800 coins in taxes.






share|improve this answer
















  • 23




    In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
    – chili555
    Sep 19 at 14:41






  • 52




    This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
    – Mason Wheeler
    Sep 19 at 15:07






  • 27




    @MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
    – ceejayoz
    Sep 19 at 16:52






  • 14




    @stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
    – Henning Makholm
    Sep 19 at 20:21







  • 6




    @MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
    – AbraCadaver
    Sep 19 at 21:38














up vote
110
down vote



accepted










Suppose your tax rate is 20%.



You have earned 5000 coins during the year and now owe 1000 coins in taxes.



Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.



Assuming you can deduct that loss, your net income for the year is now 4000 coins.



You still owe 800 coins in taxes.






share|improve this answer
















  • 23




    In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
    – chili555
    Sep 19 at 14:41






  • 52




    This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
    – Mason Wheeler
    Sep 19 at 15:07






  • 27




    @MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
    – ceejayoz
    Sep 19 at 16:52






  • 14




    @stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
    – Henning Makholm
    Sep 19 at 20:21







  • 6




    @MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
    – AbraCadaver
    Sep 19 at 21:38












up vote
110
down vote



accepted







up vote
110
down vote



accepted






Suppose your tax rate is 20%.



You have earned 5000 coins during the year and now owe 1000 coins in taxes.



Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.



Assuming you can deduct that loss, your net income for the year is now 4000 coins.



You still owe 800 coins in taxes.






share|improve this answer












Suppose your tax rate is 20%.



You have earned 5000 coins during the year and now owe 1000 coins in taxes.



Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.



Assuming you can deduct that loss, your net income for the year is now 4000 coins.



You still owe 800 coins in taxes.







share|improve this answer












share|improve this answer



share|improve this answer










answered Sep 19 at 3:34









Henning Makholm

1,1481814




1,1481814







  • 23




    In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
    – chili555
    Sep 19 at 14:41






  • 52




    This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
    – Mason Wheeler
    Sep 19 at 15:07






  • 27




    @MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
    – ceejayoz
    Sep 19 at 16:52






  • 14




    @stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
    – Henning Makholm
    Sep 19 at 20:21







  • 6




    @MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
    – AbraCadaver
    Sep 19 at 21:38












  • 23




    In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
    – chili555
    Sep 19 at 14:41






  • 52




    This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
    – Mason Wheeler
    Sep 19 at 15:07






  • 27




    @MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
    – ceejayoz
    Sep 19 at 16:52






  • 14




    @stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
    – Henning Makholm
    Sep 19 at 20:21







  • 6




    @MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
    – AbraCadaver
    Sep 19 at 21:38







23




23




In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
– chili555
Sep 19 at 14:41




In other words, it cost you 1,000 coins to save 200 coins in taxes. Very bad.
– chili555
Sep 19 at 14:41




52




52




This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
– Mason Wheeler
Sep 19 at 15:07




This. "Tax deductable" does not mean what many people think it means, which leads many people to do stupid things which don't actually benefit them in a futile attempt to spite the taxman.
– Mason Wheeler
Sep 19 at 15:07




27




27




@MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
– ceejayoz
Sep 19 at 16:52




@MasonWheeler People make the same mistake with marginal tax rates - avoiding a raise or outside income because "it'll put me in the next tax bracket!"
– ceejayoz
Sep 19 at 16:52




14




14




@stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
– Henning Makholm
Sep 19 at 20:21





@stannius I deliberately set the example in a fairytale country with a single non-progressive tax rate, to show that the problem with the OP's suggestion is fundamental to how the idea of income tax works -- it's not just that this or that country has specific rules to "plug that hole". Including a discussion of limits to deductability in specific countries would blur that point.
– Henning Makholm
Sep 19 at 20:21





6




6




@MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
– AbraCadaver
Sep 19 at 21:38




@MasonWheeler: Yes, like keeping a mortgage for the interest deduction :-(
– AbraCadaver
Sep 19 at 21:38












up vote
2
down vote













If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.



Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.



You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.



If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.






share|improve this answer




















  • @stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
    – Bob Baerker
    Sep 21 at 22:06










  • @stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
    – Bob Baerker
    Sep 21 at 22:19














up vote
2
down vote













If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.



Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.



You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.



If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.






share|improve this answer




















  • @stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
    – Bob Baerker
    Sep 21 at 22:06










  • @stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
    – Bob Baerker
    Sep 21 at 22:19












up vote
2
down vote










up vote
2
down vote









If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.



Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.



You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.



If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.






share|improve this answer












If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.



Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.



You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.



If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.







share|improve this answer












share|improve this answer



share|improve this answer










answered Sep 19 at 13:04









Bob Baerker

11.5k11643




11.5k11643











  • @stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
    – Bob Baerker
    Sep 21 at 22:06










  • @stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
    – Bob Baerker
    Sep 21 at 22:19
















  • @stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
    – Bob Baerker
    Sep 21 at 22:06










  • @stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
    – Bob Baerker
    Sep 21 at 22:19















@stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
– Bob Baerker
Sep 21 at 22:06




@stannius - These days, option commissions at deep discount brokers are well under a buck, even lower if one trades size so transaction fees are almost irrelevant. The rest of your comment is too nebulous for me to understand. Given the OP's question, what specific trade would you put on that is perfectly priced option bet? If you were referring to my Pair trade suggestion, that isn't exactly a neutral bet. I stated that you would need a fundamental reason for the position. For example, it might be a reversion to the mean or it might be an expectation of out performance by one leg.
– Bob Baerker
Sep 21 at 22:06












@stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
– Bob Baerker
Sep 21 at 22:19




@stannius - Again, a lot of words which I don't understand the meaning of. Please offer some specific "perfectly priced" bets that "If you took the bet a million times, on average, you would end up with the same amount of money you started with." Some nebulous position with high variance, low to zero EV bet, and in a small-ish marginal tax rate peak means nothing to me. Where's the beef ???
– Bob Baerker
Sep 21 at 22:19

















 

draft saved


draft discarded















































 


draft saved


draft discarded














StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f100076%2fwhy-not-speculate-at-eoy-and-write-the-loss-off-on-taxes%23new-answer', 'question_page');

);

Post as a guest













































































Popular posts from this blog

How to check contact read email or not when send email to Individual?

Displaying single band from multi-band raster using QGIS

How many registers does an x86_64 CPU actually have?