Buying a Long term ES contract

S

Sky123987

I want to invest in the index futures (just being long the market)

I would like to purchase a contract whose length is > 1 year, so that I can pay 15% tax. However, when I type in an ES contract of such length, the contract isn't even trading?

How would one go about purchasing this?

Thanks
 
Maximum length out there I believe is the June '09 contract, which probably barely trades during the day.

You're better off going long some ITM or ATM SPX LEAP options. The December 2010 $1000 SPX call is offered at about $457.00, implying a 75~ move upward in the SPX by 2010. You could do the 1350 Call but that has much more time premium (about $200 worth).
 
Better yet on the ETF home front , go into SSO more bang for your buck....but why buy here, last time I checked we were in a down trending market with a real good chance of taking out 1260...
Good Luck
 
Quote from Sky123987:


I would like to purchase a contract whose length is > 1 year, so that I can pay 15% tax.
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You would only pay 15% on 60% of any profits regardless of how long you hold it. The 60/40 rule applies to all futures and index options.



If you trade index options, or other non-equity options such as on bonds, commodities or currencies, the results of a sale are treated differently.

For example, options on the SPX, OEX, and NDX are not directly or indirectly related to a specific equity (stock), but are exchange-traded options of index stocks. These are subject to the provisions of IRS Code Section 1256, which states that any gains or losses from the sale of these securities are subject to the 60/40 rule (60% of gains and losses are long-term and 40% are short-term, regardless of how long the securities are held). Non-equity options are usually reported on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles).

There have been many conflicting opinions as to whether QQQQ, DIA, and SPY options should be treated as section 1256 contracts or not. Since these do not settle in cash, as do most section 1256 contracts, some suggest that these are not section 1256 contracts. Others feel that they meet the definition a a "broad-based" index option and therefore can be treated as section 1256 contracts.
 
Quote from ess1096:

You would only pay 15% on 60% of any profits regardless of how long you hold it. The 60/40 rule applies to all futures and index options.



If you trade index options, or other non-equity options such as on bonds, commodities or currencies, the results of a sale are treated differently.

For example, options on the SPX, OEX, and NDX are not directly or indirectly related to a specific equity (stock), but are exchange-traded options of index stocks. These are subject to the provisions of IRS Code Section 1256, which states that any gains or losses from the sale of these securities are subject to the 60/40 rule (60% of gains and losses are long-term and 40% are short-term, regardless of how long the securities are held). Non-equity options are usually reported on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles).

There have been many conflicting opinions as to whether QQQQ, DIA, and SPY options should be treated as section 1256 contracts or not. Since these do not settle in cash, as do most section 1256 contracts, some suggest that these are not section 1256 contracts. Others feel that they meet the definition a a "broad-based" index option and therefore can be treated as section 1256 contracts.
More...



Wow I didn't know that... so it would be worthless to try and get the long term contract
 
I don't want the ETF. I have a TON of ETF's and I want to put the $ in the house, cause my interest rate is 6% and borrow the $ in the stock market.


The interest rate for the future contracts is like 3% now
 
Also, is the built in interest rate for futures the same as options?

I know that w/ options there is another cost of (time).

Would it still make sense to Sell all my stocks (no gains on them) put all the money into the house, and buy long options?

Cause if you make a profit on options they are taxed at the capital gains rate of 15% right?
 
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