How Does the Mixed Straddle Election Relate to Section 1256 Contracts?
A mixed straddle involves holding at least one Section 1256 contract and one non-Section 1256 position (like an equity option) that offset each other. The mixed straddle election allows a trader to choose how to treat the combined gain or loss, often to avoid the complexities of applying different tax rules to offsetting positions.
Common elections include the mixed straddle account or netting the gains and losses.
