Taxes on DJX Options

Discussion in 'Options' started by rgowka1, Feb 9, 2003.

  1. #11     Feb 9, 2003
  2. I believe that options on ETF's is a grey area that has not been 100% resolved yet (as strange as that might seem).
    #12     Feb 9, 2003
  3. a search on IRS' site didn't seem to turn up anything :(
    #13     Feb 10, 2003
  4. Are you surprised?
    #14     Feb 10, 2003
  5. It's because the NDX which the QQQ fund is tracking is a broad index - the QQQ itself (nor any other ETF) does not qualify for treatment under the "options on a broad index" provision.
    #15     Feb 10, 2003
  6. Don't bet the farm based on what the CBOE website says. The characterization on their website could definitely be a typo - under normal conditions an index with only 30 stocks in it would be characterized as narrow.

    However, the IRS might allow the Dow to be classified as a broad index just because it's so common, but don't take the CBOE's singular note on it as gospel. Didn't see anywhere in the IRS pub you noted that called out the Dow as a broad index - just the discussion of 1256 treatment. So you'd want to get a confirm from the IRS that they do indeed consider the Dow to be a broad index even though it only has 30 stocks in it before betting on it.
    #16     Feb 10, 2003
  7. dis


    NASDAQ 100 fans looking for a tax edge might want to trade MNX instead of QQQ.
    #17     Feb 12, 2003