One important warning to add about box spreads: AVOID options that expire on the last two business days of the year. They can result in a huge tax burden and/or make filing taxes a huge pain.
Why? Because long options are taxed in the year they close, while short options are taxed in the year they settle. With settlement taking two business days, you can end up with the long and short legs being taxed in different years. If the longs have a gain and the shorts have a loss, you're stuck paying taxes on the gain and waiting another year (or more in some cases... (read more)
One important warning to add about box spreads: AVOID options that expire on the last two business days of the year. They can result in a huge tax burden and/or make filing taxes a huge pain.
Why? Because long options are taxed in the year they close, while short options are taxed in the year they settle. With settlement taking two business days, you can end up with the long and short legs being taxed in different years. If the longs have a gain and the shorts have a loss, you're stuck paying taxes on the gain and waiting another year (or more in some cases... (read more)