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1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
cnbc doing a piece on the trader tax in the 11AM hour
I don't understand why people don't get that they're going to pay this tax, and its more significant than they realize. Instantly the markets for stocks will widen out.
Right now lets say AAPL is trading at 80, well if i have to pay a .25% tax, then my market for AAPL has to be 40 cents wide(at least) I'll sell for 20 cents more than fair value and buy for 20 cents less, all to cover my costs. You the consumer pay 20 cents more per share than the stock is worth, and you lose 20 cents when you go to sell.
Point of note, the current market in AAPL is 2 cents wide, and it would move to 40 cents wide.
So who really loses? Yes you wipe out the speculators, but you also take that money away from regular customers.
If you want, we can extend this logic to the options markets. The options market makers, knowing they'll lose 20 cents when they go to hedge their stock, will only buy/sell and option with at least 20 cents in edge. This will basically eliminate the entire covered call industry.
Currently, most OTM options in AAPL are about 2-3 cents wide, this would instantly balloon to 23 cents wide, making most OTM options non-existent, and all other options prohibitively expensive.
This tax is conceivably the worst idea I've ever heard.
Right now lets say AAPL is trading at 80, well if i have to pay a .25% tax, then my market for AAPL has to be 40 cents wide(at least) I'll sell for 20 cents more than fair value and buy for 20 cents less, all to cover my costs. You the consumer pay 20 cents more per share than the stock is worth, and you lose 20 cents when you go to sell.
Point of note, the current market in AAPL is 2 cents wide, and it would move to 40 cents wide.
So who really loses? Yes you wipe out the speculators, but you also take that money away from regular customers.
If you want, we can extend this logic to the options markets. The options market makers, knowing they'll lose 20 cents when they go to hedge their stock, will only buy/sell and option with at least 20 cents in edge. This will basically eliminate the entire covered call industry.
Currently, most OTM options in AAPL are about 2-3 cents wide, this would instantly balloon to 23 cents wide, making most OTM options non-existent, and all other options prohibitively expensive.
This tax is conceivably the worst idea I've ever heard.
Quote from tm8749:
If this tax is implemented, all of you Obama lover's have only yourselves to blame.
I'll actually laugh my ass of if this tax goes into effect. Everyone will just have to pay it, and will. But again, you only have yourselves to blame for putting a socialist, quota hire in the white house. One who couldn't pass an F.B.I. or C.I.A. background investigation due to his shady associations with people like domestic terrorist Bill Ayers. In 1997, Obama endorsed a book written by this terrorist, who was responsible for bombing the U.S. Capitol, Pentagon, and New York City Police Headquarters in the 1970's. In the Ayers Book, "A Kind and Just Parent: The Children of Juvenile Court", Obama's picture is on the back cover smiling, and praising Ayers.
You get what you ask for!!!
Yet another alias on ET coming back from the dead . . . Only your 2nd post since Sept. of 2007???
Give me a break.
I really wish that Baron would stop this crap that allows people to "park" screen
names only to use them at a later date as one of several aliases.
Coward.
To actually defend Obama, his economic team is way too smart to listen to this monkey on CNBC right now. Summer and Geitner are waaaaay to smart to do something like this.