Yes, it does, I agree. However, if you scroll down a little more, you will see that "Broad" is defined as...
Broad = "Market" Index (Lower Margin Requirements).
The key phrase here is "Margin Requirements".
Taxes on DJX Options
- Thread starter rgowka1
- Start date
Yes, it does, I agree. However, if you scroll down a little more, you will see that "Broad" is defined as...
Broad = "Market" Index (Lower Margin Requirements).
The key phrase here is "Margin Requirements".
I believe that options on ETF's is a grey area that has not been 100% resolved yet (as strange as that might seem).
Quote from trader42:
a search on IRS' site didn't seem to turn up anything
Are you surprised?
Don't bet the farm based on what the CBOE website says. The characterization on their website could definitely be a typo - under normal conditions an index with only 30 stocks in it would be characterized as narrow.
However, the IRS might allow the Dow to be classified as a broad index just because it's so common, but don't take the CBOE's singular note on it as gospel. Didn't see anywhere in the IRS pub you noted that called out the Dow as a broad index - just the discussion of 1256 treatment. So you'd want to get a confirm from the IRS that they do indeed consider the Dow to be a broad index even though it only has 30 stocks in it before betting on it.