I sell futures options, mostly, run my own and some friends and family. Not much 300K or so. Is there any reason to get a CTA? I know if I were doing stocks and equity options getting a Series 7 would get me risk margin, as opposed to Reg D. But is there any advantage, with regard to margin, if doing futures options, which uses SPAN? Is there any other advantage? I'm not really looking to market myself, at least not yet. What about incorporating, mark-to-market, etc.?
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Futures question: CTA or incorporate?
- Thread starter nravo
- Start date
If you don't have to register as a CTA, don't spend the money. See the NFA website for the exemptions to the registration rules.
Incorporate if you want liability protection or to fund a tax advantaged retirement account (assuming you are a US citizen). You'll probably pay higher taxes, though, if you incorporate.
Don't make the mark-to-market election. Futures options (and futures) are automatically marked to market every night (including Dec. 31st) and there are no such thing as unrealized capital gains or wash sales. But you knew that, right?
Aaron Schindler
Schindler Trading
Incorporate if you want liability protection or to fund a tax advantaged retirement account (assuming you are a US citizen). You'll probably pay higher taxes, though, if you incorporate.
Don't make the mark-to-market election. Futures options (and futures) are automatically marked to market every night (including Dec. 31st) and there are no such thing as unrealized capital gains or wash sales. But you knew that, right?
Aaron Schindler
Schindler Trading
Quote from Aaron:
If you don't have to register as a CTA, don't spend the money. See the NFA website for the exemptions to the registration rules.
Incorporate if you want liability protection or to fund a tax advantaged retirement account (assuming you are a US citizen). You'll probably pay higher taxes, though, if you incorporate.
Don't make the mark-to-market election. Futures options (and futures) are automatically marked to market every night (including Dec. 31st) and there are no such thing as unrealized capital gains or wash sales. But you knew that, right?
Aaron Schindler
Schindler Trading
Thanks. Follow up: What if 1-5 percent of my trades or so are equity option sales? Mark-to-market?
Quote from nravo:
Thanks. Follow up: What if 1-5 percent of my trades or so are equity option sales? Mark-to-market?
Well, then it depends on if you are going to be profitable or not -- and you have to decide it at the beginning of the year (no, I'm not kidding). Here's the scoop:
http://fairmark.com/traders/mtmacc.htm
and here:
http://www.armencomp.com/tradelog/mark_to_market.shtml
And keep in mind that mark to market isn't going to affect your investors if you are trading their accounts via power of attorney -- just your own personal account and taxes.
Aaron Schindler
Schindler Trading