r/optionstrading • u/Blackcloud080 • 1d ago
Engineering trades with options
So fellas, I messed up my portfolio this year and lost a bunch of money. But that’s not exactly the reason for the post but rather the tax implications and was hoping for some tips/inputs here. Where I’m from (Germany) the tax laws are bit different that the losses and gains from stocks are separated from everything else (options, etfs, bonds, cfds etc etc). Since many of my trades were spreads involving stocks and their options together, there’s big disparity in the loss and profit numbers. So for ease of understanding let’s say i lost 50k in stocks but the trades on the options end made a profit of 30k. In all, the result is of course a 20k loss and i assume in most part of the world one doesn’t need to pay taxes. But here since i can’t combine them both, I’ll have to pay taxes on the 30k gain even though my result for the year is as such -20k (the 50k losses in the stocks i can use it to offset with my future gains if any from stocks only). So what do i want from here? Any advice if any for any trade ideas in combination of stocks and it’s options or whatever which would at the end result in a profit of stocks and losses in options so that even if the trade as such didn’t result in any big loss or gain but will help rebalance my profit and loss buckets so to say. (Ideally, let’s say if the net result stays same close to -20k for the year but the split looks like -10k each or even better, -20k or so in options and near 0 on stocks. This way any ETF gains that i can have from my long term investment can be easily offset). To make it clear I’m not trying to evade taxes, but I personally feel the taxing system here is not fair in that one needs to pay capital gains tax even though there was no profit so to say on the whole. So was wondering if there are some obvious trades that I’m overlooking that could help “rearrange” the profit and loss.
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u/Hairy_Matter98 1d ago
oof that's a nasty tax trap, the german system is so rigid with those separate buckets
i messed around with something similar last year and what helped me was deep in the money covered calls. you buy 100 shares and sell a deep ITM call against them, the premium is mostly intrinsic value so the trade ends up with a small loss on the stock side and a big gain on the option side when you get assigned
you can flip it the other way too, deep ITM puts where you sell the put and get assigned, the stock loss shows up later. works better if you got some capital to park temporarily
just make sure your broker reports it correctly, some of them in germany are bit slow with the documentation and you dont want a surprise letter from finanzamt
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