Taking Futures to a New Level
Advanced uses of futures include scalping, pairs trading and delta hedging
Futures contracts offer retail traders some strategic advantages that aren’t available with stocks and exchange-traded funds (ETFs), including scalping, pairs trading and portfolio hedging.
Scalping may seem obvious, but futures scalping offers two advantages over scalping stocks or exchange-traded funds: tax efficiency and freedom from pattern day trading restrictions. Unlike stocks or ETFs, futures gains or losses are taxed at a generous 60/40 long-term/short-term tax system.
That means that no matter how long an investor holds the trade, the feds tax 40% of the profit/loss (P/L) for futures contracts at the standard income tax rate, but 60% of the...
