OohPooPahDoo
Gold Member
You will need to buy X shares and Y synthetic or real futures on the underlying.
If your tax rate is R, then you will need Y = (R/(1-R))*X
E.G. suppose you are buying a short term investment and your tax rate is 28%.
You buy 10000 shares of SPY and 39x100 synthetic futures.,
Say the stock gains 10%. Your total gain is 10% on the stock and 3.9% from the futures, for 13.9%. The government gets 0.28 * 13.9% = 3.9% of it in taxes, and you're left with 10% - the original gain from the stock.
If it loses 10% - everything is reversed.
The scheme needs some tinkering to account for the fact losses might not be immediately deductible.
Opinions. Comments. Do any investors use a strategy like this?
If your tax rate is R, then you will need Y = (R/(1-R))*X
E.G. suppose you are buying a short term investment and your tax rate is 28%.
You buy 10000 shares of SPY and 39x100 synthetic futures.,
Say the stock gains 10%. Your total gain is 10% on the stock and 3.9% from the futures, for 13.9%. The government gets 0.28 * 13.9% = 3.9% of it in taxes, and you're left with 10% - the original gain from the stock.
If it loses 10% - everything is reversed.
The scheme needs some tinkering to account for the fact losses might not be immediately deductible.
Opinions. Comments. Do any investors use a strategy like this?
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