What Specific Financial Derivatives Are Classified as Section 1256 Contracts?
Section 1256 contracts include regulated futures contracts, non-equity options, and foreign currency contracts. Regulated futures are traded on or subject to the rules of a qualified board or exchange.
Non-equity options include options on futures, broad-based stock indexes, and certain debt instruments. Single-stock options and options on narrow-based indexes are generally excluded unless they are dealer equity options.
Glossar
Section 1256
Standardization ⎊ This specific tax code provision mandates special treatment for certain regulated futures contracts, which can apply to crypto derivatives traded on designated exchanges under specific conditions.
Regulated Futures Contracts
Contract ⎊ Regulated futures contracts, particularly within the evolving landscape of cryptocurrency derivatives, represent standardized agreements obligating one party to buy or sell an asset at a predetermined price and date.
Regulated Futures
Assurance ⎊ Regulated Futures offer market participants a high degree of operational assurance, stemming from the mandatory oversight by established financial regulatory bodies like the CFTC.
Foreign Currency Contracts
Contract ⎊ Foreign currency contracts, within the context of cryptocurrency, options trading, and financial derivatives, represent agreements to exchange one currency for another at a predetermined future date and exchange rate.
1256 Contracts
Classification ⎊ Section 1256 Contracts refer to a specific tax designation applied to certain regulated futures contracts and non-equity options.