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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: Stan Michael who wrote (648)	12/16/1998 8:13:00 PM
From: Colin Cody	Read Replies (1) \| Respond to of 1383

Stan, Is this too "investorish" for the IRS if I claim trader status? that would be my opinion. I do a fair amount of scalping 1/4's and 1/2, This sounds like what a TRADER would do, IF you meet all the other requirements. but if the premiums on the options look good, I nibble the % for the calls. This is in conjunction with writing selected naked calls as well, so obviously I'm not a low-risk buy-and-holder. Depends on how much of what activity you do. A TRADER may also have a few INVESTMENTS. The trader normally might identify the investment purchases at the time they are made, but in some instances it makes little difference when he (or if he) identifies them as such. Remember that a Trader's outlook is to catch "market swings" and spend a lot of his time and effort do so. Playing a lengthy arbitrage with option premiums is something I do not recall having seen in any Trader court cases. There was a case where Trader status was denied where a guy made hundreds (if not thousands) of high risk trades every year, working at it full time, Level II, the works. But he wasn't geared toward market swings, rather he was looking for potential big percentage moves in individual stocks. That's an investor, said the court. Colin