What about Tx costs? Some brokers may charge to close the position and wouldn't you would then have the Tx cost of purchasing the shares? I know you're not a tax guy but isn't part of the appeal of trading options vis a vis shares the preferable tax treatment that options get vs short-term capital gains on trading stock?
I don't know what you mean. Commission costs are negligible. The appeal of trading options is the leverage. A capital gain is a capital gain. If you have a short-term capital gain on an option you'll pay the same tax as a short-term capital gain on shares. The exception is if you're trading a Section 1256 product like SPX options with a portion of profits taxed at long-term capital gains.
That's because I had failed to take into account the special treatment of SPX. Any thought about, essentially, Day-Trading far in the future, far OTM calls? I've been testing (via my paper trading account) trades with TSLA, SPX and your favorite, MSTR and noticed that there are opportunities to make some serious coin on the moves of those options, intra-day.
I wouldn't use LEAPS for day trading since they are illiquid. Not much trading activity/wide bid-ask spreads don't make for good in-and-out trades. That's just my opinion!
If you have a day trading (short-term) outlook on a stock's price, then trading short-term options would be far superior in terms of the % returns you'd get and the liquidity in the options.
What about Tx costs? Some brokers may charge to close the position and wouldn't you would then have the Tx cost of purchasing the shares? I know you're not a tax guy but isn't part of the appeal of trading options vis a vis shares the preferable tax treatment that options get vs short-term capital gains on trading stock?
I don't know what you mean. Commission costs are negligible. The appeal of trading options is the leverage. A capital gain is a capital gain. If you have a short-term capital gain on an option you'll pay the same tax as a short-term capital gain on shares. The exception is if you're trading a Section 1256 product like SPX options with a portion of profits taxed at long-term capital gains.
Therein lies my error: I failed to account for the different treatment of SPX vs other options. I apologize for the error.
No need to apologize! I thought you were saying all options have better tax treatment than shares.
That's because I had failed to take into account the special treatment of SPX. Any thought about, essentially, Day-Trading far in the future, far OTM calls? I've been testing (via my paper trading account) trades with TSLA, SPX and your favorite, MSTR and noticed that there are opportunities to make some serious coin on the moves of those options, intra-day.
I wouldn't use LEAPS for day trading since they are illiquid. Not much trading activity/wide bid-ask spreads don't make for good in-and-out trades. That's just my opinion!
If you have a day trading (short-term) outlook on a stock's price, then trading short-term options would be far superior in terms of the % returns you'd get and the liquidity in the options.
That's EXACTLY the kind of info I was seeking. Thanks Chris.