Protection

[Vanraw]

First let me say again, that I am not a tax expert, nor am I a trader / market expert. And that what Im about to talk about is dangerous nasty stuff in which you could lose all your money, and you only have to blame your self....... or Grieve of course, cause we can always blame him.


In this thread, I've been playing with making money off the market fluctuation by using triple leveraged ETF's and bracketed sell orders. Buying triple leveraged ETF’s that are Bear or Bull depending on what I think the market as a whole is going to do. However buying and selling the same ETF within 30 day’s violates the WASH rule. I knew this, but proceeded with my “experiment” anyway.

Lots of information on the internet on Wash rules…..

One way around the wash rule is you become a trader business. That is you file your taxes as you run a business that trades stocks and you do taxes based on the business profit loss etc not the individual trades.There are some vague rules the IRS defines of who is or is not a trader business (Again, tons of info out there if you search).

Another way around it is to assure you buy and sell stocks / ETF’s that are different. ETF's can be traded in this way, as long as the base of the ETF is a different index. So for instance, you might own Exon, it goes way down, and while you still want to own the stock / sector, you would also like to lock in the loss for taxes. So you sell Exon, and rather then buy exon back, buy a energy based ETF that might have 10 or 15% of its holdings in Exon. Even though the ETF might own Exon, it doesn’t break the wash rule. But buying and selling the energy ETF multiple times in 30 days does break the rule.

In that light, I pulled together index based ETF’s that are all leveraged. I looked for triple leverage (read dangerous!!!) ETF’s. I then looked for ETF’s that were Domestic in nature and has substantial 90 day average volume. I then made sure that each ETF had a bear and bull version, so that depending on where the market is, you could “short” or buy the market. Below is the list of 11 ETF pairs (bull and bears) I came up with. The concept is to buy TNA (Small Cap ETF), for instance, sell it, and then if another buying opportunity comes up, buy FAS (Financial index) and sell, then TYH (Tech) or Russell2k…. etc etc.

Bottom line as long as you buy different indexes / base ETF’s then its not a WASH violation. AT least that’s how I’m reading. Note that I have not talked to my tax guy yet.

Small Cap
Direxion Daily Small Cp Bull 3X Shs(ETF) TNA
Direxion Daily Small Cap Bear 3X Shares TZA

Tech
Direxion Daily Tech Bull 3x Shs (ETF) TYH
Direxion Daily Tech Bear 3x Shs(ETF) TYP

Finance
Direxion Daily Finan. Bull 3X Shs(ETF) FAS
Direxion Daily Finan. Bear 3X Shs(ETF) FAZ

Large Cap
Direxion Daily Large Cp Bull 3X Shs(ETF) BGU
Direxion Daily Large Cap Bear 3X Shares BGZ

S&P 500
ProShares UltraPro S&P 500 (ETF UPRO
ProShares UltraPro Short S&P 500 (ETF) SPXU

Energy
Direxion Daily Energy Bull 3X Shs(ETF) ERX
Direxion Daily Energy Bear 3X Shs(ETF) ERY

Russell2000
ProShares UltraPro Russell2000 ETF URTY
ProShares UltraPro Short Russell2000 ETF SRTY

Semiconductor
Direxion Daily Semiconductor Bull 3X Shs SOXL
Direxion Daily Semiconductor Bear 3X Shs( SOXS

NASDAQ 100 (QQQ)
ProShares UltraPro QQQ TQQQ
ProShares UltraPro Short QQQ SQQQ

Emerging Markets
Direxion Daily Emr Mkts Bull 3x Shs(ETF) EDC
Direxion Daily Emr Mkts Bear 3x Shs(ETF EDZ

Gold Miners
Direxion Daily Gold Miners Bull 2X Shares NUGT
Direxion Daily Gold Miners Bear 2X Shares DUST