: Are futures options eligible for the 60/40 tax rule? How are options taxed when the underlying asset is a futures contract. Futures contracts in the US have a favorable tax treatment known as the 60/40 rule, where 60% of

Vote Up Vote Down   0 Reactions

Login to give Reaction!

First, the usual caveat applies: consult a tax professional with experience in these matters. That being said, the term you're looking for is a Section 1256 contract. The 60/40 rule applies to any contract that falls under this designation, which includes

Regulated futures contracts
Foreign currency contracts
Nonequity options
Dealer equity options
Dealer securities futures contracts

Futures options (on commodities, indexes, etc.) would fall under the "nonequity option" category, which is

any listed option (defined later) that is not an equity option. Nonequity options include debt options, commodity futures options, currency options, and broad-based stock index options. A broad-based stock index is based on the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index).