Derivatives

Michael Henchard

Hey guys. Do many of you trade options? I am thinking of starting to trade US options but I'm wondering about taxation implications. Anyone know how derivatives such as options are taxed? Is it the same for CFDs?

Also any experience of thinkorswim as broker/platform?

Thanks in advance.

strmin

Gains from options taxed as capital gains.

Michael Henchard wrote: »

Hey guys. Do many of you trade options? I am thinking of starting to trade US options but I'm wondering about taxation implications. Anyone know how derivatives such as options are taxed? Is it the same for CFDs?

Also any experience of thinkorswim as broker/platform?

Thanks in advance.

Michael Henchard

thanks man

JHet

Michael Henchard wrote: »

thanks man

Hi

I had thought about doing this also but I don't know if the cost of transferring the funds would be worth it. The US branch won't accept a non US account so you would need to use an intermediary bank to transfer the funds across. You have the fx rate transfer fees on top of this plus an fx gain/loss from EUR/USD fluctuations. On top of this when it comes time to withdraw you're going to have to go through the exact same process.

I had wanted to do the same to leverage off the thinkorswim platform. There is something excellent content on the tasty trade website and they leverage off this platform. They take a different approach to investor education. Its all about probability of profit, rather than trading on fundamentals or technical analysis. They have a new platform called dough which makes things even simpler and plugs directly into a td ameritrade brokerage account. What they are doing makes a huge amount of sense and I would love to get involved, the account opening process and difficulties mentioned above are a huge blocker for me especially as a beginner investor.

Would be great if they offered the same services in Europe but I don't think that's likely any time soon.

Best of luck
J

strmin

I think you need to do more research and pick cheaper broker.
To deposit money I pay 0
withdrawals cost 0
FX fee for any amount $2.5
Fee per options contact $0.7-1.00

I don't think that is expensive.

Michael Henchard

Hey strmin
If you are already trading options would you be able to shed a little light on your experience, especially with an American broker. I trade with IG Index and Markets at the moment but am really interested in pursuing options strategies to take things up a notch.

JHET, I understand your reluctance but from what i can see a straight wire transfer from your bank will do the trick. Interactive brokers appear cheapest but ToS are competitive also and have a better platform. FX fluctuations are part of the game too if you want to trade US. Try to get comfortable with charges - see the forest for the trees dude.

tradingwizz

Just following up on OP post. I see advice was given to treat gains/losses as capital gains/losses. I think this needs clarifying. If you are "trading" and jumping in and out of equity based share options (calls/puts/verticals/ICs etc) then this could be construed as trading and therefore requires income tax to be paid on gains, in the same way as income tax has to be paid on any other forms of "trading". The good side of this is that losses can be treated as negative income and subtracted from any positive income (say from PAYE income).

It would be good to hear from someone who actually knows about the tax treatment on options/derivatives. Most advice relates to employer related share option schemes which of course is completely irrelevant when it comes to the taxation of personal trading.