GreenTraderTax & GreenTraderFunds - Message Board: Option Straddles, Timeframe: 1-2 month?

Hello,

I would be grateful for your opinion about whether the following full-time professional trading activity could possibly qualify for Trader Tax status:

When trading option straddles for regular news events such as corporate earnings, it is important not to buy volatility. Hence, one enters 3-4 weeks before earnings when volatility is typically low. Since the expected price movement may take another few weeks to develop, the entire position may need to be held for a total of 1-2 months. Due to the relatively long timeframe, and with the reduced risk afforded by the offsetting option positions, one can invest large amounts of capital in such trades with relative safety and still achieve large gains. One can also profit from an increase in volatility.

Personally, I do not feel that such strategies should be considered "investment" strategies and I do not think they should be considered "long term" strategies either, but I suspect the IRS may disagree.

My main question is "can the above style of trading qualify for trader tax status under any circumstances if it is repeated regularly enough and shows a clear profit"?

Assuming that trading is one's full time activity, I think it would be very difficult to make at least one trade for each day of the year using the strategy as outlined above. In terms of maintaining Trader Tax Status, are there any special exceptions for cases like these?

Would you recommend using a different brokerage account and/or alternative accounting method for the straddle-based trading strategy outlined above assuming that one already uses an existing brokerage acoount to separately daytrade as a full-time business?

Thank you again.

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