Tax straddle treatment for downside protection of…
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Tax straddle treatment for downside protection of portfolio with puts
I'm reaching the age/portfolio size where a fast 50% drawdown (say over 6 months) would be a headache, while a 3-5 year grind down wouldn't bother me nearly as much (due to other income, margin, etc.)
I'm considering spending \~3%/year on staggered puts to protect my core buy-and-hold SPY and QQQ portfolio, and expect the long-run cost to be around 1.5%/year (including the gains due to crashes). **The goal is partly to hedge but also to have lump sum cash to deploy after a crash.**
My main concern is that the 1092 straddle treatment and the **potential deferral of put losses** \- which means I cannot offset my put losses again my realized gains from swing trading.
**Has anyone actually protected their taxable portfolio with puts (not bonds)? How did the taxes work in practice?**
Thanks
#business
source
I'm reaching the age/portfolio size where a fast 50% drawdown (say over 6 months) would be a headache, while a 3-5 year grind down wouldn't bother me nearly as much (due to other income, margin, etc.)
I'm considering spending \~3%/year on staggered puts to protect my core buy-and-hold SPY and QQQ portfolio, and expect the long-run cost to be around 1.5%/year (including the gains due to crashes). **The goal is partly to hedge but also to have lump sum cash to deploy after a crash.**
My main concern is that the 1092 straddle treatment and the **potential deferral of put losses** \- which means I cannot offset my put losses again my realized gains from swing trading.
**Has anyone actually protected their taxable portfolio with puts (not bonds)? How did the taxes work in practice?**
Thanks
#business
source
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