Buy SPX or XSP options, not SPY

I've seen a lot of posts with YOLOs on SPY calls and puts, some people holding 100s of contracts. If you're going to buy enough SPY calls, just buy SPX, and even if you're buying 1, just buy XSP. Should you somehow manage to pull gains, you get 60/40 long/short term capital gains, rather than 100% short term capital gains.

If you are a millionaire/hold 1000+ shares of SPY to sell covered calls, you could mimic a similar position in SPX, selling weeklies at the nicer tax rates as well. Even if you can't afford deep ITM SPX options, you can mimic a similar SPY position with deep ITM XSP options.

Not only this, but you are getting fucked by market makers if you buy SPY calls. You'll notice that the premium is quite a bit higher when compared against XSP.

TL;DR: If you wanted to YOLO on 0DTE options, just do it on indexes. If you win, you won't be getting fucked by the tax man as hard as you otherwise would be.

Edit to add: Make sure you don't get fucked with an AM settlement though. Monthly contracts expire AM on Fridays, so keep that in mind if you do go buying.

submitted by /u/Traditional_Fee_8828
[link] [comments]

Jump To The Original Source

Share this Story
Load More Related Articles
Load More In Stock News

Facebook Comments

Check Also

Olympics-Lim becomes Singapore’s first female diver to qualify for Games

Published by Reuters (Reuters) – Freida Lim has ...