i forgot the ticker of the inverse SPY but if you own that and SPY is that considered shorting "against the box?" what if you own SSO and the 1x inverse SPY?
If the purpose of that is to avoid taxes or transfering money from one account to another laws are writen in such a way that they can cought you if they want.
If your are in the US, I don't think that would be "against the box" as defined by IRS. It sounds like it may be more like the generalized definition of a "straddle" as described in page 58-59 of the 2008 IRS Publication 550. Personally, the wording in that publication does not give enough examples, so the potential to make an 'honest mistake' is there. I am sure the new Treasury Secretary Geitner will be lenient if you honestly misinterpret the definition.
SSO is an ETF attemptng to match 2x long S&P 500 and SDS is short 2x S&P 500 and SPY is an ETF that tracks the SP 500. 3 different securities.
So with that interpretation, would the following be considered a "straddle" and need to be filled out in Section II of Form 6781? 1. Vertical Option Spreads 2. Butterflies/Condors/Strangles/etc 3. Futures spreads (Crack, Crush, etc)